Correlation Between Flowers Foods and SYSTEMAIR

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

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

Diversification Opportunities for Flowers Foods and SYSTEMAIR

0.26

Correlation Coefficient

Flowers Foods  SYSTEMAIR

Modest diversification

The 3 months correlation between Flowers and SYSTEMAIR is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB and Flowers Foods 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 Flowers Foods 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 Flowers Foods i.e., Flowers Foods and SYSTEMAIR go up and down completely randomly.

Pair Corralation between Flowers Foods and SYSTEMAIR

Assuming the 90 days horizon Flowers Foods is expected to under-perform the SYSTEMAIR. But the stock apears to be less risky and, when comparing its historical volatility, Flowers Foods is 2.92 times less risky than SYSTEMAIR. The stock trades about -0.12 of its potential returns per unit of risk. The SYSTEMAIR AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  771.00  in SYSTEMAIR AB on September 22, 2024 and sell it today you would earn a total of  13.00  from holding SYSTEMAIR AB or generate 1.69% return on investment over 90 days.

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

Flowers Foods  vs.  SYSTEMAIR AB

Flowers Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flowers Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Flowers Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SYSTEMAIR AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 2 (%) 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 Flowers Foods and SYSTEMAIR

The main advantage of trading using opposite Flowers Foods and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods 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 Flowers Foods 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.