Correlation Between WT OFFSHORE and SYSTEMAIR

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

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

Diversification Opportunities for WT OFFSHORE and SYSTEMAIR

0.17

Correlation Coefficient

WT OFFSHORE  SYSTEMAIR

Average diversification

The 3 months correlation between UWV and SYSTEMAIR is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding WT OFFSHORE and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB and WT OFFSHORE 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 WT OFFSHORE 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 WT OFFSHORE i.e., WT OFFSHORE and SYSTEMAIR go up and down completely randomly.

Pair Corralation between WT OFFSHORE and SYSTEMAIR

Assuming the 90 days trading horizon WT OFFSHORE is expected to generate 1.47 times more return on investment than SYSTEMAIR. However, WT OFFSHORE is 1.47 times more volatile than SYSTEMAIR AB. It trades about -0.03 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about -0.05 per unit of risk. If you would invest  179.00  in WT OFFSHORE on December 2, 2024 and sell it today you would lose (20.00) from holding WT OFFSHORE or give up 11.17% of portfolio value over 90 days.

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

WT OFFSHORE  vs.  SYSTEMAIR AB

WT OFFSHORE

Risk-Adjusted Performance

Very Weak

Over the last 90 days WT OFFSHORE 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.

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. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with WT OFFSHORE and SYSTEMAIR

The main advantage of trading using opposite WT OFFSHORE and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT OFFSHORE 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 WT OFFSHORE 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.