Correlation Between EQT AB and Image Systems

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

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

Diversification Opportunities for EQT AB and Image Systems

-0.28

Correlation Coefficient

EQT AB  Image Systems

Very good diversification

The 3 months correlation between EQT and Image is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and Image Systems AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Image Systems AB and EQT AB 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 EQT AB are associated (or correlated) with Image Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Image Systems AB has no effect on the direction of EQT AB i.e., EQT AB and Image Systems go up and down completely randomly.

Pair Corralation between EQT AB and Image Systems

Assuming the 90 days trading horizon EQT AB is expected to generate 0.35 times more return on investment than Image Systems. However, EQT AB is 2.82 times less risky than Image Systems. It trades about 0.02 of its potential returns per unit of risk. Image Systems AB is currently generating about 0.0 per unit of risk. If you would invest  30,610  in EQT AB on December 28, 2024 and sell it today you would earn a total of  610.00  from holding EQT AB or generate 1.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

EQT AB  vs.  Image Systems AB

EQT AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EQT AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EQT AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Image Systems AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Image Systems AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Image Systems is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EQT AB and Image Systems

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

The idea behind EQT AB and Image Systems 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.