Correlation Between Trelleborg and Systemair

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

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

Diversification Opportunities for Trelleborg and Systemair

-0.55

Correlation Coefficient

Trelleborg  Systemair

Excellent diversification

The 3 months correlation between Trelleborg and Systemair is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Trelleborg AB and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB and Trelleborg 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 Trelleborg AB are associated (or correlated) with Systemair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systemair AB has no effect on the direction of Trelleborg i.e., Trelleborg and Systemair go up and down completely randomly.

Pair Corralation between Trelleborg and Systemair

Assuming the 90 days trading horizon Trelleborg AB is expected to generate 0.56 times more return on investment than Systemair. However, Trelleborg AB is 1.8 times less risky than Systemair. It trades about 0.16 of its potential returns per unit of risk. Systemair AB is currently generating about -0.07 per unit of risk. If you would invest  36,880  in Trelleborg AB on December 1, 2024 and sell it today you would earn a total of  4,880  from holding Trelleborg AB or generate 13.23% return on investment over 90 days.

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

Trelleborg AB  vs.  Systemair AB

Trelleborg AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trelleborg AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Trelleborg sustained solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Trelleborg and Systemair

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

The idea behind Trelleborg AB and Systemair 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.