Correlation Between Systemair and Ecofin Global

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

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

Diversification Opportunities for Systemair and Ecofin Global

-0.59

Correlation Coefficient

Systemair  Ecofin Global

Excellent diversification

The 3 months correlation between Systemair and Ecofin is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Ecofin Global Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Global Utilities 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 Ecofin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Global Utilities has no effect on the direction of Systemair i.e., Systemair and Ecofin Global go up and down completely randomly.

Pair Corralation between Systemair and Ecofin Global

Assuming the 90 days trading horizon Systemair AB is expected to under-perform the Ecofin Global. In addition to that, Systemair is 1.83 times more volatile than Ecofin Global Utilities. It trades about -0.09 of its total potential returns per unit of risk. Ecofin Global Utilities is currently generating about 0.11 per unit of volatility. If you would invest  17,844  in Ecofin Global Utilities on December 29, 2024 and sell it today you would earn a total of  1,456  from holding Ecofin Global Utilities or generate 8.16% return on investment over 90 days.

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

Systemair AB  vs.  Ecofin Global Utilities

Systemair AB

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ecofin Global Utilities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ecofin Global Utilities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Ecofin Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Systemair and Ecofin Global

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

The idea behind Systemair AB and Ecofin Global Utilities 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.