Correlation Between Risuntek and LSI Industries

Can any of the company-specific risk be diversified away by investing in both Risuntek and LSI Industries 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 Risuntek and LSI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Risuntek and LSI Industries, you can compare the effects of market volatilities on Risuntek and LSI Industries 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 Risuntek with a short position of LSI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Risuntek and LSI Industries.

Diversification Opportunities for Risuntek and LSI Industries

-0.04

Correlation Coefficient

Risuntek  LSI Industries

Good diversification

The 3 months correlation between Risuntek and LSI is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Risuntek and LSI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSI Industries and Risuntek 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 Risuntek are associated (or correlated) with LSI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSI Industries has no effect on the direction of Risuntek i.e., Risuntek and LSI Industries go up and down completely randomly.

Pair Corralation between Risuntek and LSI Industries

Assuming the 90 days trading horizon Risuntek is expected to under-perform the LSI Industries. But the stock apears to be less risky and, when comparing its historical volatility, Risuntek is 1.72 times less risky than LSI Industries. The stock trades about -0.06 of its potential returns per unit of risk. The LSI Industries is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,935  in LSI Industries on December 30, 2024 and sell it today you would lose (216.00) from holding LSI Industries or give up 11.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Risuntek  vs.  LSI Industries

Risuntek

Risk-Adjusted Performance

Very Weak

Over the last 90 days Risuntek has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

LSI Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days LSI Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Risuntek and LSI Industries

The main advantage of trading using opposite Risuntek and LSI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Risuntek position performs unexpectedly, LSI Industries 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 Industries will offset losses from the drop in LSI Industries' long position.

The idea behind Risuntek and LSI Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.