Correlation Between Image Systems and Garo AB

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

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

Diversification Opportunities for Image Systems and Garo AB

0.37

Correlation Coefficient

Image Systems  Garo AB

Weak diversification

The 3 months correlation between Image and Garo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Image Systems AB and Garo AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garo AB and Image 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 Image Systems AB are associated (or correlated) with Garo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garo AB has no effect on the direction of Image Systems i.e., Image Systems and Garo AB go up and down completely randomly.

Pair Corralation between Image Systems and Garo AB

Assuming the 90 days horizon Image Systems is expected to generate 1.38 times less return on investment than Garo AB. In addition to that, Image Systems is 1.57 times more volatile than Garo AB. It trades about 0.03 of its total potential returns per unit of risk. Garo AB is currently generating about 0.06 per unit of volatility. 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

Image Systems AB  vs.  Garo AB

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.

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.

Pair Trading with Image Systems and Garo AB

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

The idea behind Image Systems AB and Garo 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..