Correlation Between Risma Systems and Penneo AS

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

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

Diversification Opportunities for Risma Systems and Penneo AS

0.74

Correlation Coefficient

Risma Systems  Penneo AS

Poor diversification

The 3 months correlation between Risma and Penneo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Risma Systems AS and Penneo AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penneo AS and Risma 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 Risma Systems AS are associated (or correlated) with Penneo AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penneo AS has no effect on the direction of Risma Systems i.e., Risma Systems and Penneo AS go up and down completely randomly.

Pair Corralation between Risma Systems and Penneo AS

Assuming the 90 days trading horizon Risma Systems AS is expected to generate 13.65 times more return on investment than Penneo AS. However, Risma Systems is 13.65 times more volatile than Penneo AS. It trades about 0.05 of its potential returns per unit of risk. Penneo AS is currently generating about 0.18 per unit of risk. If you would invest  610.00  in Risma Systems AS on November 29, 2024 and sell it today you would earn a total of  50.00  from holding Risma Systems AS or generate 8.2% return on investment over 90 days.

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

Risma Systems AS  vs.  Penneo AS

Risma Systems AS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Risma Systems AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Risma Systems exhibited solid returns over the last few months and may actually be approaching a breakup point.

Penneo AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Penneo AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Penneo AS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Risma Systems and Penneo AS

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

The idea behind Risma Systems AS and Penneo 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.