Correlation Between Micro Systemation and Avensia Publ

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

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

Diversification Opportunities for Micro Systemation and Avensia Publ

0.68

Correlation Coefficient

Micro Systemation  Avensia Publ

Poor diversification

The 3 months correlation between Micro and Avensia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Micro Systemation AB and Avensia publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avensia publ AB and Micro Systemation 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 Micro Systemation AB are associated (or correlated) with Avensia Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avensia publ AB has no effect on the direction of Micro Systemation i.e., Micro Systemation and Avensia Publ go up and down completely randomly.

Pair Corralation between Micro Systemation and Avensia Publ

Assuming the 90 days trading horizon Micro Systemation is expected to generate 1.95 times less return on investment than Avensia Publ. In addition to that, Micro Systemation is 1.13 times more volatile than Avensia publ AB. It trades about 0.09 of its total potential returns per unit of risk. Avensia publ AB is currently generating about 0.2 per unit of volatility. If you would invest  786.00  in Avensia publ AB on November 29, 2024 and sell it today you would earn a total of  180.00  from holding Avensia publ AB or generate 22.9% return on investment over 90 days.

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

Micro Systemation AB  vs.  Avensia publ AB

Micro Systemation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micro Systemation AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Micro Systemation may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Avensia publ AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avensia publ AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Avensia Publ unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micro Systemation and Avensia Publ

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

The idea behind Micro Systemation AB and Avensia publ 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.