Correlation Between IAR Systems and Triboron International

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

Diversification Opportunities for IAR Systems and Triboron International

-0.3

Correlation Coefficient

IAR Systems  Triboron International

Very good diversification

The 3 months correlation between IAR and Triboron is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and Triboron International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triboron International 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 Triboron International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triboron International has no effect on the direction of IAR Systems i.e., IAR Systems and Triboron International go up and down completely randomly.

Pair Corralation between IAR Systems and Triboron International

Assuming the 90 days trading horizon IAR Systems Group is expected to generate 0.71 times more return on investment than Triboron International. However, IAR Systems Group is 1.4 times less risky than Triboron International. It trades about -0.01 of its potential returns per unit of risk. Triboron International AB is currently generating about -0.2 per unit of risk. If you would invest  12,550  in IAR Systems Group on September 22, 2024 and sell it today you would lose (200.00) from holding IAR Systems Group or give up 1.59% of portfolio value over 90 days.

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

IAR Systems Group  vs.  Triboron International 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Triboron International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triboron International AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Triboron International is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IAR Systems and Triboron International

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

The idea behind IAR Systems Group and Triboron International 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.