Correlation Between Future Metals and Systemair

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

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

Diversification Opportunities for Future Metals and Systemair

-0.67

Correlation Coefficient

Future Metals  Systemair

Excellent diversification

The 3 months correlation between Future and Systemair is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB and Future Metals 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 Future Metals NL 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 Future Metals i.e., Future Metals and Systemair go up and down completely randomly.

Pair Corralation between Future Metals and Systemair

Assuming the 90 days trading horizon Future Metals NL is expected to under-perform the Systemair. In addition to that, Future Metals is 1.58 times more volatile than Systemair AB. It trades about -0.05 of its total potential returns per unit of risk. Systemair AB is currently generating about 0.09 per unit of volatility. If you would invest  8,530  in Systemair AB on September 17, 2024 and sell it today you would earn a total of  920.00  from holding Systemair AB or generate 10.79% return on investment over 90 days.

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

Future Metals NL  vs.  Systemair AB

Future Metals NL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Future Metals NL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Systemair AB

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Systemair AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Systemair may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Future Metals and Systemair

The main advantage of trading using opposite Future Metals and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Metals 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 Future Metals NL 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.