Correlation Between MapsPeople and Risma Systems

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

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

Diversification Opportunities for MapsPeople and Risma Systems

0.79

Correlation Coefficient

MapsPeople  Risma Systems

Poor diversification

The 3 months correlation between MapsPeople and Risma is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding MapsPeople AS and Risma Systems AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risma Systems AS and MapsPeople 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 MapsPeople AS are associated (or correlated) with Risma Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risma Systems AS has no effect on the direction of MapsPeople i.e., MapsPeople and Risma Systems go up and down completely randomly.

Pair Corralation between MapsPeople and Risma Systems

Assuming the 90 days trading horizon MapsPeople AS is expected to under-perform the Risma Systems. In addition to that, MapsPeople is 1.4 times more volatile than Risma Systems AS. It trades about -0.05 of its total potential returns per unit of risk. Risma Systems AS is currently generating about -0.06 per unit of volatility. If you would invest  835.00  in Risma Systems AS on September 1, 2024 and sell it today you would lose (225.00) from holding Risma Systems AS or give up 26.95% of portfolio value over 90 days.

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

MapsPeople AS  vs.  Risma Systems AS

MapsPeople AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MapsPeople AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Risma Systems AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Risma Systems AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with MapsPeople and Risma Systems

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

The idea behind MapsPeople AS and Risma Systems AS 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.