Correlation Between New Tech and LSI Software
Can any of the company-specific risk be diversified away by investing in both New Tech 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 New Tech and LSI Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Tech Venture and LSI Software SA, you can compare the effects of market volatilities on New Tech 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 New Tech with a short position of LSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Tech and LSI Software.
Diversification Opportunities for New Tech and LSI Software
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and LSI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New Tech Venture 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 New Tech 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 New Tech Venture 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 New Tech i.e., New Tech and LSI Software go up and down completely randomly.
Pair Corralation between New Tech and LSI Software
Assuming the 90 days trading horizon New Tech Venture is expected to generate 2.06 times more return on investment than LSI Software. However, New Tech is 2.06 times more volatile than LSI Software SA. It trades about 0.02 of its potential returns per unit of risk. LSI Software SA is currently generating about -0.06 per unit of risk. If you would invest 13.00 in New Tech Venture on August 28, 2024 and sell it today you would earn a total of 0.00 from holding New Tech Venture or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 57.89% |
| Values | Daily Returns |
New Tech Venture vs. LSI Software SA
Performance |
| Timeline |
| New Tech Venture |
| LSI Software SA |
New Tech and LSI Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Tech and LSI Software
The main advantage of trading using opposite New Tech and LSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Tech 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.| New Tech vs. Asseco Business Solutions | New Tech vs. Detalion Games SA | New Tech vs. Asseco South Eastern | New Tech vs. Movie Games SA |
| LSI Software vs. SOFTWARE MANSION SPOLKA | LSI Software vs. Echo Investment SA | LSI Software vs. Carlson Investments SA | LSI Software vs. Quantum Software SA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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