Correlation Between Fram Skandinavien and Systemair

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

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

Diversification Opportunities for Fram Skandinavien and Systemair

-0.73

Correlation Coefficient

Fram Skandinavien  Systemair

Pay attention - limited upside

The 3 months correlation between Fram and Systemair is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fram Skandinavien AB and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB and Fram Skandinavien 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 Fram Skandinavien AB 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 Fram Skandinavien i.e., Fram Skandinavien and Systemair go up and down completely randomly.

Pair Corralation between Fram Skandinavien and Systemair

Assuming the 90 days trading horizon Fram Skandinavien AB is expected to generate 1.53 times more return on investment than Systemair. However, Fram Skandinavien is 1.53 times more volatile than Systemair AB. It trades about 0.09 of its potential returns per unit of risk. Systemair AB is currently generating about -0.05 per unit of risk. If you would invest  800.00  in Fram Skandinavien AB on November 29, 2024 and sell it today you would earn a total of  125.00  from holding Fram Skandinavien AB or generate 15.63% return on investment over 90 days.

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

Fram Skandinavien AB  vs.  Systemair AB

Fram Skandinavien

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fram Skandinavien AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Fram Skandinavien sustained solid returns over the last few months and may actually be approaching a breakup point.

Systemair AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Systemair AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Fram Skandinavien and Systemair

The main advantage of trading using opposite Fram Skandinavien and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fram Skandinavien 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 Fram Skandinavien AB 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.