Correlation Between BRIT AMER and SYSTEMAIR

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

By analyzing existing cross correlation between BRIT AMER TOBACCO and SYSTEMAIR AB, you can compare the effects of market volatilities on BRIT AMER and SYSTEMAIR 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 BRIT AMER with a short position of SYSTEMAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and SYSTEMAIR.

Diversification Opportunities for BRIT AMER and SYSTEMAIR

0.81

Correlation Coefficient

BRIT AMER  SYSTEMAIR

Very poor diversification

The 3 months correlation between BRIT and SYSTEMAIR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB and BRIT AMER 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 BRIT AMER TOBACCO are associated (or correlated) with SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of BRIT AMER i.e., BRIT AMER and SYSTEMAIR go up and down completely randomly.

Pair Corralation between BRIT AMER and SYSTEMAIR

Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.54 times more return on investment than SYSTEMAIR. However, BRIT AMER TOBACCO is 1.87 times less risky than SYSTEMAIR. It trades about 0.08 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.0 per unit of risk. If you would invest  3,274  in BRIT AMER TOBACCO on September 27, 2024 and sell it today you would earn a total of  181.00  from holding BRIT AMER TOBACCO or generate 5.53% return on investment over 90 days.

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

BRIT AMER TOBACCO  vs.  SYSTEMAIR AB

BRIT AMER TOBACCO

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BRIT AMER TOBACCO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BRIT AMER is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SYSTEMAIR AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SYSTEMAIR AB has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with BRIT AMER and SYSTEMAIR

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

The idea behind BRIT AMER TOBACCO and SYSTEMAIR AB 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.