Correlation Between SOFTWARE MANSION and Tower Investments

Can any of the company-specific risk be diversified away by investing in both SOFTWARE MANSION and Tower Investments 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 Tower Investments 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 Tower Investments SA, you can compare the effects of market volatilities on SOFTWARE MANSION and Tower Investments 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 Tower Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFTWARE MANSION and Tower Investments.

Diversification Opportunities for SOFTWARE MANSION and Tower Investments

-0.33

Correlation Coefficient

SOFTWARE MANSION  Tower Investments

Very good diversification

The 3 months correlation between SOFTWARE and Tower is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SOFTWARE MANSION SPOLKA and Tower Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Investments 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 Tower Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Investments has no effect on the direction of SOFTWARE MANSION i.e., SOFTWARE MANSION and Tower Investments go up and down completely randomly.

Pair Corralation between SOFTWARE MANSION and Tower Investments

Assuming the 90 days trading horizon SOFTWARE MANSION SPOLKA is expected to generate 3.1 times more return on investment than Tower Investments. However, SOFTWARE MANSION is 3.1 times more volatile than Tower Investments SA. It trades about 0.21 of its potential returns per unit of risk. Tower Investments SA is currently generating about -0.05 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SOFTWARE MANSION SPOLKA  vs.  Tower Investments 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.

Tower Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tower Investments SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tower Investments 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 SOFTWARE MANSION and Tower Investments

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

The idea behind SOFTWARE MANSION SPOLKA and Tower Investments 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.