Correlation Between Systemair and Antofagasta PLC

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

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

Diversification Opportunities for Systemair and Antofagasta PLC

-0.33

Correlation Coefficient

Systemair  Antofagasta PLC

Very good diversification

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

Pair Corralation between Systemair and Antofagasta PLC

Assuming the 90 days trading horizon Systemair AB is expected to generate 1.3 times more return on investment than Antofagasta PLC. However, Systemair is 1.3 times more volatile than Antofagasta PLC. It trades about 0.0 of its potential returns per unit of risk. Antofagasta PLC is currently generating about 0.0 per unit of risk. If you would invest  8,320  in Systemair AB on October 24, 2024 and sell it today you would lose (110.00) from holding Systemair AB or give up 1.32% of portfolio value over 90 days.

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

Systemair AB  vs.  Antofagasta PLC

Systemair AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Systemair AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Systemair is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Antofagasta PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antofagasta PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Antofagasta PLC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Systemair and Antofagasta PLC

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

The idea behind Systemair AB and Antofagasta PLC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.