Correlation Between MYFAIR GOLD and SYSTEMAIR

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

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

Diversification Opportunities for MYFAIR GOLD and SYSTEMAIR

0.02

Correlation Coefficient

MYFAIR GOLD  SYSTEMAIR

Significant diversification

The 3 months correlation between MYFAIR and SYSTEMAIR is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding MYFAIR GOLD P and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB and MYFAIR GOLD 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 MYFAIR GOLD P 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 MYFAIR GOLD i.e., MYFAIR GOLD and SYSTEMAIR go up and down completely randomly.

Pair Corralation between MYFAIR GOLD and SYSTEMAIR

Assuming the 90 days horizon MYFAIR GOLD P is expected to generate 2.21 times more return on investment than SYSTEMAIR. However, MYFAIR GOLD is 2.21 times more volatile than SYSTEMAIR AB. It trades about 0.06 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.11 per unit of risk. If you would invest  109.00  in MYFAIR GOLD P on September 3, 2024 and sell it today you would earn a total of  12.00  from holding MYFAIR GOLD P or generate 11.01% return on investment over 90 days.

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

MYFAIR GOLD P  vs.  SYSTEMAIR AB

MYFAIR GOLD P

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MYFAIR GOLD P are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MYFAIR GOLD reported solid returns over the last few months and may actually be approaching a breakup point.

SYSTEMAIR AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SYSTEMAIR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MYFAIR GOLD and SYSTEMAIR

The main advantage of trading using opposite MYFAIR GOLD and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MYFAIR GOLD 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 MYFAIR GOLD P 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.