Correlation Between Logismos Information and Cenergy Holdings

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

By analyzing existing cross correlation between Logismos Information Systems and Cenergy Holdings SA, you can compare the effects of market volatilities on Logismos Information and Cenergy Holdings 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 Logismos Information with a short position of Cenergy Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Logismos Information and Cenergy Holdings.

Diversification Opportunities for Logismos Information and Cenergy Holdings

0.86

Correlation Coefficient

Logismos Information  Cenergy Holdings

Very poor diversification

The 3 months correlation between Logismos and Cenergy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Logismos Information Systems and Cenergy Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenergy Holdings and Logismos Information 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 Logismos Information Systems are associated (or correlated) with Cenergy Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenergy Holdings has no effect on the direction of Logismos Information i.e., Logismos Information and Cenergy Holdings go up and down completely randomly.

Pair Corralation between Logismos Information and Cenergy Holdings

Assuming the 90 days trading horizon Logismos Information Systems is expected to generate 1.26 times more return on investment than Cenergy Holdings. However, Logismos Information is 1.26 times more volatile than Cenergy Holdings SA. It trades about 0.22 of its potential returns per unit of risk. Cenergy Holdings SA is currently generating about 0.15 per unit of risk. If you would invest  127.00  in Logismos Information Systems on October 25, 2024 and sell it today you would earn a total of  36.00  from holding Logismos Information Systems or generate 28.35% return on investment over 90 days.

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

Logismos Information Systems  vs.  Cenergy Holdings SA

Logismos Information

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Logismos Information Systems are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Logismos Information displayed solid returns over the last few months and may actually be approaching a breakup point.

Cenergy Holdings

Risk-Adjusted Performance

11 of 100

OK

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

Pair Trading with Logismos Information and Cenergy Holdings

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

The idea behind Logismos Information Systems and Cenergy Holdings 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.