Correlation Between MCI Management and LSI Software
Can any of the company-specific risk be diversified away by investing in both MCI Management and LSI Software at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MCI Management and LSI Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCI Management SA and LSI Software SA, you can compare the effects of market volatilities on MCI Management and LSI Software and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MCI Management with a short position of LSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCI Management and LSI Software.
Diversification Opportunities for MCI Management and LSI Software
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MCI and LSI is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding MCI Management SA and LSI Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSI Software SA and MCI Management is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MCI Management SA are associated (or correlated) with LSI Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSI Software SA has no effect on the direction of MCI Management i.e., MCI Management and LSI Software go up and down completely randomly.
Pair Corralation between MCI Management and LSI Software
Assuming the 90 days trading horizon MCI Management is expected to generate 3.18 times less return on investment than LSI Software. But when comparing it to its historical volatility, MCI Management SA is 1.4 times less risky than LSI Software. It trades about 0.05 of its potential returns per unit of risk. LSI Software SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,490 in LSI Software SA on August 31, 2024 and sell it today you would earn a total of 60.00 from holding LSI Software SA or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCI Management SA vs. LSI Software SA
Performance |
| Timeline |
| MCI Management SA |
| LSI Software SA |
MCI Management and LSI Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCI Management and LSI Software
The main advantage of trading using opposite MCI Management and LSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCI Management position performs unexpectedly, LSI Software can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LSI Software will offset losses from the drop in LSI Software's long position.| MCI Management vs. Immobile | MCI Management vs. Baked Games SA | MCI Management vs. Varsav Game Studios | MCI Management vs. Echo Investment SA |
| LSI Software vs. Asseco Poland SA | LSI Software vs. Quantum Software SA | LSI Software vs. Detalion Games SA | LSI Software vs. Asseco South Eastern |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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