Correlation Between Micro Systemation and Cint Group

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

Diversification Opportunities for Micro Systemation and Cint Group

0.67

Correlation Coefficient

Micro Systemation  Cint Group

Poor diversification

The 3 months correlation between Micro and Cint is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Micro Systemation AB and Cint Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cint Group 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 Cint Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cint Group AB has no effect on the direction of Micro Systemation i.e., Micro Systemation and Cint Group go up and down completely randomly.

Pair Corralation between Micro Systemation and Cint Group

Assuming the 90 days trading horizon Micro Systemation AB is expected to generate 0.7 times more return on investment than Cint Group. However, Micro Systemation AB is 1.43 times less risky than Cint Group. It trades about -0.31 of its potential returns per unit of risk. Cint Group AB is currently generating about -0.35 per unit of risk. If you would invest  4,970  in Micro Systemation AB on October 6, 2024 and sell it today you would lose (390.00) from holding Micro Systemation AB or give up 7.85% of portfolio value over 90 days.

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

Micro Systemation AB  vs.  Cint Group AB

Micro Systemation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Micro Systemation AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Micro Systemation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cint Group AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cint Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cint Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micro Systemation and Cint Group

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

The idea behind Micro Systemation AB and Cint Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.