Correlation Between Filo Mining and IAR Systems

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

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

Diversification Opportunities for Filo Mining and IAR Systems

-0.72

Correlation Coefficient

Filo Mining  IAR Systems

Pay attention - limited upside

The 3 months correlation between Filo and IAR is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Filo Mining Corp and IAR Systems Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAR Systems Group and Filo Mining 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 Filo Mining Corp are associated (or correlated) with IAR Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAR Systems Group has no effect on the direction of Filo Mining i.e., Filo Mining and IAR Systems go up and down completely randomly.

Pair Corralation between Filo Mining and IAR Systems

Assuming the 90 days trading horizon Filo Mining Corp is expected to generate 0.43 times more return on investment than IAR Systems. However, Filo Mining Corp is 2.31 times less risky than IAR Systems. It trades about 0.06 of its potential returns per unit of risk. IAR Systems Group is currently generating about -0.08 per unit of risk. If you would invest  24,000  in Filo Mining Corp on August 31, 2024 and sell it today you would earn a total of  950.00  from holding Filo Mining Corp or generate 3.96% return on investment over 90 days.

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

Filo Mining Corp  vs.  IAR Systems Group

Filo Mining Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Filo Mining Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Filo Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

IAR Systems Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IAR Systems Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Filo Mining and IAR Systems

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

The idea behind Filo Mining Corp and IAR Systems Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.