Correlation Between Systemair and GoldMining

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

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

Diversification Opportunities for Systemair and GoldMining

-0.54

Correlation Coefficient

Systemair  GoldMining

Excellent diversification

The 3 months correlation between Systemair and GoldMining is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Systemair 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 Systemair AB are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Systemair i.e., Systemair and GoldMining go up and down completely randomly.

Pair Corralation between Systemair and GoldMining

Assuming the 90 days trading horizon Systemair AB is expected to generate 0.56 times more return on investment than GoldMining. However, Systemair AB is 1.78 times less risky than GoldMining. It trades about 0.04 of its potential returns per unit of risk. GoldMining is currently generating about -0.01 per unit of risk. If you would invest  6,644  in Systemair AB on September 13, 2024 and sell it today you would earn a total of  3,096  from holding Systemair AB or generate 46.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	36.65%
Values	Daily Returns

Systemair AB  vs.  GoldMining

Systemair AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Systemair AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Systemair unveiled solid returns over the last few months and may actually be approaching a breakup point.

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Systemair and GoldMining

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

The idea behind Systemair AB and GoldMining 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.