Correlation Between IAR Systems and Acarix AS

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

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

Diversification Opportunities for IAR Systems and Acarix AS

-0.36

Correlation Coefficient

IAR Systems  Acarix AS

Very good diversification

The 3 months correlation between IAR and Acarix is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and Acarix AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acarix AS and IAR Systems 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 IAR Systems Group are associated (or correlated) with Acarix AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acarix AS has no effect on the direction of IAR Systems i.e., IAR Systems and Acarix AS go up and down completely randomly.

Pair Corralation between IAR Systems and Acarix AS

Assuming the 90 days trading horizon IAR Systems Group is expected to under-perform the Acarix AS. But the stock apears to be less risky and, when comparing its historical volatility, IAR Systems Group is 1.45 times less risky than Acarix AS. The stock trades about -0.02 of its potential returns per unit of risk. The Acarix AS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Acarix AS on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Acarix AS or generate 0.0% return on investment over 90 days.

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

IAR Systems Group  vs.  Acarix AS

IAR Systems Group

Risk-Adjusted Performance

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 comparatively stable basic indicators, IAR Systems is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Acarix AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acarix AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Acarix AS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IAR Systems and Acarix AS

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

The idea behind IAR Systems Group and Acarix AS 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.