Correlation Between Image Systems and Precise Biometrics

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

Diversification Opportunities for Image Systems and Precise Biometrics

0.55

Correlation Coefficient

Image Systems  Precise Biometrics

Very weak diversification

The 3 months correlation between Image and Precise is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Image Systems AB and Precise Biometrics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precise Biometrics 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 Precise Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precise Biometrics has no effect on the direction of Image Systems i.e., Image Systems and Precise Biometrics go up and down completely randomly.

Pair Corralation between Image Systems and Precise Biometrics

Assuming the 90 days horizon Image Systems AB is expected to generate 0.88 times more return on investment than Precise Biometrics. However, Image Systems AB is 1.14 times less risky than Precise Biometrics. It trades about 0.0 of its potential returns per unit of risk. Precise Biometrics AB is currently generating about 0.0 per unit of risk. If you would invest  283.00  in Image Systems AB on December 30, 2024 and sell it today you would lose (33.00) from holding Image Systems AB or give up 11.66% of portfolio value over 90 days.

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

Image Systems AB  vs.  Precise Biometrics AB

Image Systems AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Image Systems AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Image Systems is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Precise Biometrics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Precise Biometrics AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Precise Biometrics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Image Systems and Precise Biometrics

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

The idea behind Image Systems AB and Precise Biometrics 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.