Correlation Between Systemair and Investment

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

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

Diversification Opportunities for Systemair and Investment

0.5

Correlation Coefficient

Systemair  Investment

Very weak diversification

The 3 months correlation between Systemair and Investment is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and The Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment has no effect on the direction of Systemair i.e., Systemair and Investment go up and down completely randomly.

Pair Corralation between Systemair and Investment

Assuming the 90 days trading horizon Systemair AB is expected to generate 3.61 times more return on investment than Investment. However, Systemair is 3.61 times more volatile than The Investment. It trades about 0.1 of its potential returns per unit of risk. The Investment is currently generating about 0.06 per unit of risk. If you would invest  8,430  in Systemair AB on September 12, 2024 and sell it today you would earn a total of  1,030  from holding Systemair AB or generate 12.22% return on investment over 90 days.

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

Systemair AB  vs.  The Investment

Systemair AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Systemair AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Systemair may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Investment is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Systemair and Investment

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

The idea behind Systemair AB and The Investment 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.