Correlation Between GOLD ROAD and SYSTEMAIR

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

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

Diversification Opportunities for GOLD ROAD and SYSTEMAIR

0.46

Correlation Coefficient

GOLD ROAD  SYSTEMAIR

Very weak diversification

The 3 months correlation between GOLD and SYSTEMAIR is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB and GOLD ROAD 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 GOLD ROAD RES 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 GOLD ROAD i.e., GOLD ROAD and SYSTEMAIR go up and down completely randomly.

Pair Corralation between GOLD ROAD and SYSTEMAIR

Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 1.08 times more return on investment than SYSTEMAIR. However, GOLD ROAD is 1.08 times more volatile than SYSTEMAIR AB. It trades about 0.14 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.04 per unit of risk. If you would invest  104.00  in GOLD ROAD RES on October 10, 2024 and sell it today you would earn a total of  21.00  from holding GOLD ROAD RES or generate 20.19% return on investment over 90 days.

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

GOLD ROAD RES  vs.  SYSTEMAIR AB

GOLD ROAD RES

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

SYSTEMAIR AB

Risk-Adjusted Performance

3 of 100

Weak

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 stable basic indicators, SYSTEMAIR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GOLD ROAD and SYSTEMAIR

The main advantage of trading using opposite GOLD ROAD and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD 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 GOLD ROAD RES 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.