Correlation Between Enghouse Systems and Lightspeed Commerce

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

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

Diversification Opportunities for Enghouse Systems and Lightspeed Commerce

-0.47

Correlation Coefficient

Enghouse Systems  Lightspeed Commerce

Very good diversification

The 3 months correlation between Enghouse and Lightspeed is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Enghouse Systems and Lightspeed Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightspeed Commerce and Enghouse Systems 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 Enghouse Systems are associated (or correlated) with Lightspeed Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lightspeed Commerce has no effect on the direction of Enghouse Systems i.e., Enghouse Systems and Lightspeed Commerce go up and down completely randomly.

Pair Corralation between Enghouse Systems and Lightspeed Commerce

Assuming the 90 days trading horizon Enghouse Systems is expected to under-perform the Lightspeed Commerce. But the stock apears to be less risky and, when comparing its historical volatility, Enghouse Systems is 1.6 times less risky than Lightspeed Commerce. The stock trades about -0.02 of its potential returns per unit of risk. The Lightspeed Commerce is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,421  in Lightspeed Commerce on April 25, 2025 and sell it today you would earn a total of  370.00  from holding Lightspeed Commerce or generate 26.04% return on investment over 90 days.

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

Enghouse Systems  vs.  Lightspeed Commerce

Enghouse Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enghouse Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Enghouse Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Lightspeed Commerce

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lightspeed Commerce are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Lightspeed Commerce displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enghouse Systems and Lightspeed Commerce

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

The idea behind Enghouse Systems and Lightspeed Commerce 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.