Correlation Between Information Services and SPORT LISBOA

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

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

Diversification Opportunities for Information Services and SPORT LISBOA

0.53

Correlation Coefficient

Information Services  SPORT LISBOA

Very weak diversification

The 3 months correlation between Information and SPORT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E and Information Services 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 Information Services International Dentsu are associated (or correlated) with SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of Information Services i.e., Information Services and SPORT LISBOA go up and down completely randomly.

Pair Corralation between Information Services and SPORT LISBOA

Assuming the 90 days horizon Information Services International Dentsu is expected to under-perform the SPORT LISBOA. But the stock apears to be less risky and, when comparing its historical volatility, Information Services International Dentsu is 1.89 times less risky than SPORT LISBOA. The stock trades about 0.0 of its potential returns per unit of risk. The SPORT LISBOA E is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  370.00  in SPORT LISBOA E on April 20, 2025 and sell it today you would earn a total of  182.00  from holding SPORT LISBOA E or generate 49.19% return on investment over 90 days.

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

Information Services Internati  vs.  SPORT LISBOA E

Information Services

Risk-Adjusted Performance

Very Weak

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

SPORT LISBOA E

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPORT LISBOA E are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SPORT LISBOA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Information Services and SPORT LISBOA

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

The idea behind Information Services International Dentsu and SPORT LISBOA E 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.