Correlation Between LSI Software and Games Operators

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

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

Diversification Opportunities for LSI Software and Games Operators

0.49

Correlation Coefficient

LSI Software  Games Operators

Very weak diversification

The 3 months correlation between LSI and Games is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding LSI Software SA and Games Operators SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Operators SA and LSI Software 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 LSI Software SA are associated (or correlated) with Games Operators. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Operators SA has no effect on the direction of LSI Software i.e., LSI Software and Games Operators go up and down completely randomly.

Pair Corralation between LSI Software and Games Operators

Assuming the 90 days trading horizon LSI Software SA is expected to generate 1.43 times more return on investment than Games Operators. However, LSI Software is 1.43 times more volatile than Games Operators SA. It trades about 0.25 of its potential returns per unit of risk. Games Operators SA is currently generating about -0.02 per unit of risk. If you would invest  1,580  in LSI Software SA on April 24, 2025 and sell it today you would earn a total of  1,020  from holding LSI Software SA or generate 64.56% return on investment over 90 days.

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

LSI Software SA  vs.  Games Operators SA

LSI Software SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LSI Software SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, LSI Software reported solid returns over the last few months and may actually be approaching a breakup point.

Games Operators SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Games Operators SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Games Operators is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with LSI Software and Games Operators

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

The idea behind LSI Software SA and Games Operators 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.