Correlation Between SYSTEMAIR and BORR DRILLING

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

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

Diversification Opportunities for SYSTEMAIR and BORR DRILLING

-0.43

Correlation Coefficient

SYSTEMAIR  BORR DRILLING

Very good diversification

The 3 months correlation between SYSTEMAIR and BORR is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW 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 BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and BORR DRILLING go up and down completely randomly.

Pair Corralation between SYSTEMAIR and BORR DRILLING

Assuming the 90 days trading horizon SYSTEMAIR AB is expected to generate 0.51 times more return on investment than BORR DRILLING. However, SYSTEMAIR AB is 1.95 times less risky than BORR DRILLING. It trades about 0.05 of its potential returns per unit of risk. BORR DRILLING NEW is currently generating about -0.1 per unit of risk. If you would invest  734.00  in SYSTEMAIR AB on October 11, 2024 and sell it today you would earn a total of  38.00  from holding SYSTEMAIR AB or generate 5.18% 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.  BORR DRILLING NEW

SYSTEMAIR AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SYSTEMAIR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BORR DRILLING NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BORR DRILLING NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SYSTEMAIR and BORR DRILLING

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

The idea behind SYSTEMAIR AB and BORR DRILLING NEW 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.