Correlation Between Tomra Systems and Integrated Wind

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

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

Diversification Opportunities for Tomra Systems and Integrated Wind

0.4

Correlation Coefficient

Tomra Systems  Integrated Wind

Very weak diversification

The 3 months correlation between Tomra and Integrated is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tomra Systems ASA and Integrated Wind Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Wind Solutions and Tomra 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 Tomra Systems ASA are associated (or correlated) with Integrated Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Wind Solutions has no effect on the direction of Tomra Systems i.e., Tomra Systems and Integrated Wind go up and down completely randomly.

Pair Corralation between Tomra Systems and Integrated Wind

Assuming the 90 days trading horizon Tomra Systems is expected to generate 4.92 times less return on investment than Integrated Wind. But when comparing it to its historical volatility, Tomra Systems ASA is 1.09 times less risky than Integrated Wind. It trades about 0.01 of its potential returns per unit of risk. Integrated Wind Solutions is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,480  in Integrated Wind Solutions on September 25, 2024 and sell it today you would earn a total of  1,100  from holding Integrated Wind Solutions or generate 31.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Tomra Systems ASA  vs.  Integrated Wind Solutions

Tomra Systems ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tomra Systems ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Tomra Systems is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Integrated Wind Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Wind Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Tomra Systems and Integrated Wind

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

The idea behind Tomra Systems ASA and Integrated Wind Solutions 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.