Correlation Between SYSTEMAIR and WESTERN AREAS

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

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

Diversification Opportunities for SYSTEMAIR and WESTERN AREAS

0.0

Correlation Coefficient

SYSTEMAIR  WESTERN AREAS

Pay attention - limited upside

The 3 months correlation between SYSTEMAIR and WESTERN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and WESTERN AREAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN AREAS 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 WESTERN AREAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN AREAS has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and WESTERN AREAS go up and down completely randomly.

Pair Corralation between SYSTEMAIR and WESTERN AREAS

If you would invest  744.00  in SYSTEMAIR AB on October 10, 2024 and sell it today you would earn a total of  26.00  from holding SYSTEMAIR AB or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SYSTEMAIR AB  vs.  WESTERN AREAS

SYSTEMAIR AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SYSTEMAIR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

WESTERN AREAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTERN AREAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WESTERN AREAS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SYSTEMAIR and WESTERN AREAS

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

The idea behind SYSTEMAIR AB and WESTERN AREAS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.