Correlation Between Levinstein Eng and WhiteSmoke Software

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

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

Diversification Opportunities for Levinstein Eng and WhiteSmoke Software

0.62

Correlation Coefficient

Levinstein Eng  WhiteSmoke Software

Poor diversification

The 3 months correlation between Levinstein and WhiteSmoke is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Levinstein Eng and WhiteSmoke Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WhiteSmoke Software and Levinstein Eng 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 Levinstein Eng are associated (or correlated) with WhiteSmoke Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WhiteSmoke Software has no effect on the direction of Levinstein Eng i.e., Levinstein Eng and WhiteSmoke Software go up and down completely randomly.

Pair Corralation between Levinstein Eng and WhiteSmoke Software

Assuming the 90 days trading horizon Levinstein Eng is expected to generate 0.4 times more return on investment than WhiteSmoke Software. However, Levinstein Eng is 2.51 times less risky than WhiteSmoke Software. It trades about 0.79 of its potential returns per unit of risk. WhiteSmoke Software is currently generating about -0.23 per unit of risk. If you would invest  2,750,000  in Levinstein Eng on August 30, 2024 and sell it today you would earn a total of  920,000  from holding Levinstein Eng or generate 33.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Levinstein Eng  vs.  WhiteSmoke Software

Levinstein Eng

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Levinstein Eng are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Levinstein Eng sustained solid returns over the last few months and may actually be approaching a breakup point.

WhiteSmoke Software

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WhiteSmoke Software are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, WhiteSmoke Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Levinstein Eng and WhiteSmoke Software

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

The idea behind Levinstein Eng and WhiteSmoke Software 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..