Correlation Between Tellusgruppen and Image Systems

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

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

Diversification Opportunities for Tellusgruppen and Image Systems

-0.27

Correlation Coefficient

Tellusgruppen  Image Systems

Very good diversification

The 3 months correlation between Tellusgruppen and Image is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Tellusgruppen AB and Image Systems AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Image Systems AB and Tellusgruppen 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 Tellusgruppen AB are associated (or correlated) with Image Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Image Systems AB has no effect on the direction of Tellusgruppen i.e., Tellusgruppen and Image Systems go up and down completely randomly.

Pair Corralation between Tellusgruppen and Image Systems

Assuming the 90 days trading horizon Tellusgruppen is expected to generate 11.41 times less return on investment than Image Systems. But when comparing it to its historical volatility, Tellusgruppen AB is 1.94 times less risky than Image Systems. It trades about 0.02 of its potential returns per unit of risk. Image Systems AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  136.00  in Image Systems AB on September 2, 2024 and sell it today you would earn a total of  53.00  from holding Image Systems AB or generate 38.97% return on investment over 90 days.

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

Tellusgruppen AB  vs.  Image Systems AB

Tellusgruppen AB

Risk-Adjusted Performance

1 of 100

Weak

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

Image Systems AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Image Systems AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Image Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tellusgruppen and Image Systems

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

The idea behind Tellusgruppen AB and Image Systems 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.