Correlation Between Systemair and Svolder AB

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

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

Diversification Opportunities for Systemair and Svolder AB

-0.5

Correlation Coefficient

Systemair  Svolder AB

Very good diversification

The 3 months correlation between Systemair and Svolder is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Svolder AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svolder AB and Systemair 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 Systemair AB are associated (or correlated) with Svolder AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svolder AB has no effect on the direction of Systemair i.e., Systemair and Svolder AB go up and down completely randomly.

Pair Corralation between Systemair and Svolder AB

Assuming the 90 days trading horizon Systemair AB is expected to under-perform the Svolder AB. In addition to that, Systemair is 1.22 times more volatile than Svolder AB. It trades about -0.1 of its total potential returns per unit of risk. Svolder AB is currently generating about 0.11 per unit of volatility. If you would invest  5,175  in Svolder AB on December 24, 2024 and sell it today you would earn a total of  570.00  from holding Svolder AB or generate 11.01% return on investment over 90 days.

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

Systemair AB  vs.  Svolder AB

Systemair AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Systemair AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Svolder AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Svolder AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Svolder AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Systemair and Svolder AB

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

The idea behind Systemair AB and Svolder 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.