Correlation Between SYSTEMAIR and INTER CARS

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

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

Diversification Opportunities for SYSTEMAIR and INTER CARS

-0.16

Correlation Coefficient

SYSTEMAIR  INTER CARS

Good diversification

The 3 months correlation between SYSTEMAIR and INTER is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and INTER CARS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTER CARS SA 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 INTER CARS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTER CARS SA has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and INTER CARS go up and down completely randomly.

Pair Corralation between SYSTEMAIR and INTER CARS

Assuming the 90 days trading horizon SYSTEMAIR AB is expected to under-perform the INTER CARS. In addition to that, SYSTEMAIR is 1.03 times more volatile than INTER CARS SA. It trades about -0.06 of its total potential returns per unit of risk. INTER CARS SA is currently generating about 0.04 per unit of volatility. If you would invest  11,980  in INTER CARS SA on December 30, 2024 and sell it today you would earn a total of  440.00  from holding INTER CARS SA or generate 3.67% return on investment over 90 days.

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

SYSTEMAIR AB  vs.  INTER CARS SA

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

INTER CARS SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, INTER CARS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SYSTEMAIR and INTER CARS

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

The idea behind SYSTEMAIR AB and INTER CARS SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.