Correlation Between Investment Friends and LSI Software

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

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

Diversification Opportunities for Investment Friends and LSI Software

0.0

Correlation Coefficient

Investment Friends  LSI Software

Pay attention - limited upside

The 3 months correlation between Investment and LSI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Investment Friends Capital 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 Investment Friends 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 Investment Friends Capital 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 Investment Friends i.e., Investment Friends and LSI Software go up and down completely randomly.

Pair Corralation between Investment Friends and LSI Software

If you would invest  1,570  in LSI Software SA on December 31, 2024 and sell it today you would earn a total of  90.00  from holding LSI Software SA or generate 5.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Investment Friends Capital  vs.  LSI Software SA

Investment Friends

Risk-Adjusted Performance

Very Weak

Over the last 90 days Investment Friends Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Investment Friends is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

LSI Software SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LSI Software SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, LSI Software may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Investment Friends and LSI Software

The main advantage of trading using opposite Investment Friends and LSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment Friends 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.

The idea behind Investment Friends Capital and LSI Software SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.