Correlation Between Systemair and Lowland Investment

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

Diversification Opportunities for Systemair and Lowland Investment

0.02

Correlation Coefficient

Systemair  Lowland Investment

Significant diversification

The 3 months correlation between Systemair and Lowland is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Lowland Investment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowland 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 Lowland Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowland Investment has no effect on the direction of Systemair i.e., Systemair and Lowland Investment go up and down completely randomly.

Pair Corralation between Systemair and Lowland Investment

Assuming the 90 days trading horizon Systemair AB is expected to generate 2.15 times more return on investment than Lowland Investment. However, Systemair is 2.15 times more volatile than Lowland Investment Co. It trades about 0.1 of its potential returns per unit of risk. Lowland Investment Co is currently generating about 0.03 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Systemair AB  vs.  Lowland Investment Co

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.

Lowland Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lowland Investment Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Lowland 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 Lowland Investment

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

The idea behind Systemair AB and Lowland Investment Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.