Correlation Between IAR Systems and Boliden AB

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

Diversification Opportunities for IAR Systems and Boliden AB

-0.24

Correlation Coefficient

IAR Systems  Boliden AB

Very good diversification

The 3 months correlation between IAR and Boliden is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and Boliden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boliden AB 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 Boliden AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boliden AB has no effect on the direction of IAR Systems i.e., IAR Systems and Boliden AB go up and down completely randomly.

Pair Corralation between IAR Systems and Boliden AB

Assuming the 90 days trading horizon IAR Systems Group is expected to under-perform the Boliden AB. In addition to that, IAR Systems is 1.24 times more volatile than Boliden AB. It trades about -0.08 of its total potential returns per unit of risk. Boliden AB is currently generating about 0.04 per unit of volatility. If you would invest  31,100  in Boliden AB on August 31, 2024 and sell it today you would earn a total of  1,090  from holding Boliden AB or generate 3.5% 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.  Boliden AB

IAR Systems Group

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Boliden AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boliden AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Boliden AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IAR Systems and Boliden AB

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

The idea behind IAR Systems Group and Boliden 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.