Correlation Between Garo AB and Image Systems

Can any of the company-specific risk be diversified away by investing in both Garo 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 Garo 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 Garo AB and Image Systems AB, you can compare the effects of market volatilities on Garo 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 Garo AB with a short position of Image Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garo AB and Image Systems.

Diversification Opportunities for Garo AB and Image Systems

0.37

Correlation Coefficient

Garo AB  Image Systems

Weak diversification

The 3 months correlation between Garo and Image is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Garo 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 Garo 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 Garo 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 Garo AB i.e., Garo AB and Image Systems go up and down completely randomly.

Pair Corralation between Garo AB and Image Systems

Assuming the 90 days trading horizon Garo AB is expected to generate 0.64 times more return on investment than Image Systems. However, Garo AB is 1.57 times less risky than Image Systems. It trades about 0.06 of its potential returns per unit of risk. Image Systems AB is currently generating about 0.03 per unit of risk. If you would invest  2,100  in Garo AB on December 1, 2024 and sell it today you would earn a total of  185.00  from holding Garo AB or generate 8.81% return on investment over 90 days.

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

Garo AB  vs.  Image Systems AB

Garo AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Garo AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Garo AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Image Systems AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Image Systems AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Image Systems may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Garo AB and Image Systems

The main advantage of trading using opposite Garo AB and Image Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garo 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 Garo 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.