Correlation Between SOFTWARE MANSION and Road Studio

Can any of the company-specific risk be diversified away by investing in both SOFTWARE MANSION and Road Studio 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 SOFTWARE MANSION and Road Studio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SOFTWARE MANSION SPOLKA and Road Studio SA, you can compare the effects of market volatilities on SOFTWARE MANSION and Road Studio 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 SOFTWARE MANSION with a short position of Road Studio. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFTWARE MANSION and Road Studio.

Diversification Opportunities for SOFTWARE MANSION and Road Studio

0.45

Correlation Coefficient

SOFTWARE MANSION  Road Studio

Very weak diversification

The 3 months correlation between SOFTWARE and Road is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SOFTWARE MANSION SPOLKA and Road Studio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Road Studio SA and SOFTWARE MANSION 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 SOFTWARE MANSION SPOLKA are associated (or correlated) with Road Studio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Road Studio SA has no effect on the direction of SOFTWARE MANSION i.e., SOFTWARE MANSION and Road Studio go up and down completely randomly.

Pair Corralation between SOFTWARE MANSION and Road Studio

Assuming the 90 days trading horizon SOFTWARE MANSION SPOLKA is expected to generate 0.82 times more return on investment than Road Studio. However, SOFTWARE MANSION SPOLKA is 1.21 times less risky than Road Studio. It trades about 0.21 of its potential returns per unit of risk. Road Studio SA is currently generating about 0.15 per unit of risk. If you would invest  3,800  in SOFTWARE MANSION SPOLKA on April 24, 2025 and sell it today you would earn a total of  1,450  from holding SOFTWARE MANSION SPOLKA or generate 38.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

SOFTWARE MANSION SPOLKA  vs.  Road Studio SA

SOFTWARE MANSION SPOLKA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SOFTWARE MANSION SPOLKA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, SOFTWARE MANSION reported solid returns over the last few months and may actually be approaching a breakup point.

Road Studio SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Road Studio SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Road Studio reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOFTWARE MANSION and Road Studio

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

The idea behind SOFTWARE MANSION SPOLKA and Road Studio 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.

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