Correlation Between Transport International and SYSTEMAIR

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

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

Diversification Opportunities for Transport International and SYSTEMAIR

-0.37

Correlation Coefficient

Transport International  SYSTEMAIR

Very good diversification

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

Pair Corralation between Transport International and SYSTEMAIR

Assuming the 90 days horizon Transport International Holdings is expected to under-perform the SYSTEMAIR. But the stock apears to be less risky and, when comparing its historical volatility, Transport International Holdings is 1.94 times less risky than SYSTEMAIR. The stock trades about -0.03 of its potential returns per unit of risk. The SYSTEMAIR AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  548.00  in SYSTEMAIR AB on October 4, 2024 and sell it today you would earn a total of  227.00  from holding SYSTEMAIR AB or generate 41.42% return on investment over 90 days.

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

Transport International Holdin  vs.  SYSTEMAIR AB

Transport International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transport International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Transport International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SYSTEMAIR AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SYSTEMAIR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Transport International and SYSTEMAIR

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

The idea behind Transport International Holdings and SYSTEMAIR 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.