Correlation Between SPORT LISBOA and Easy Software

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

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

Diversification Opportunities for SPORT LISBOA and Easy Software

-0.32

Correlation Coefficient

SPORT LISBOA  Easy Software

Very good diversification

The 3 months correlation between SPORT and Easy is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and Easy Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easy Software AG and SPORT LISBOA 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 SPORT LISBOA E are associated (or correlated) with Easy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easy Software AG has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and Easy Software go up and down completely randomly.

Pair Corralation between SPORT LISBOA and Easy Software

Assuming the 90 days horizon SPORT LISBOA E is expected to generate 0.86 times more return on investment than Easy Software. However, SPORT LISBOA E is 1.17 times less risky than Easy Software. It trades about 0.0 of its potential returns per unit of risk. Easy Software AG is currently generating about -0.06 per unit of risk. If you would invest  312.00  in SPORT LISBOA E on October 26, 2024 and sell it today you would lose (2.00) from holding SPORT LISBOA E or give up 0.64% of portfolio value over 90 days.

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

SPORT LISBOA E  vs.  Easy Software AG

SPORT LISBOA E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORT LISBOA E has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SPORT LISBOA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Easy Software AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Easy Software AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Easy Software displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPORT LISBOA and Easy Software

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

The idea behind SPORT LISBOA E and Easy Software AG 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 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.