Correlation Between IAR Systems and Industrivarden

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

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

Diversification Opportunities for IAR Systems and Industrivarden

0.25

Correlation Coefficient

IAR Systems  Industrivarden

Modest diversification

The 3 months correlation between IAR and Industrivarden is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser and IAR 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 IAR Systems Group are associated (or correlated) with Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of IAR Systems i.e., IAR Systems and Industrivarden go up and down completely randomly.

Pair Corralation between IAR Systems and Industrivarden

Assuming the 90 days trading horizon IAR Systems Group is expected to under-perform the Industrivarden. In addition to that, IAR Systems is 2.63 times more volatile than Industrivarden AB ser. It trades about -0.05 of its total potential returns per unit of risk. Industrivarden AB ser is currently generating about 0.04 per unit of volatility. If you would invest  35,660  in Industrivarden AB ser on September 13, 2024 and sell it today you would earn a total of  900.00  from holding Industrivarden AB ser or generate 2.52% return on investment over 90 days.

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

IAR Systems Group  vs.  Industrivarden AB ser

IAR Systems Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IAR Systems Group 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.

Industrivarden AB ser

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrivarden AB ser are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Industrivarden is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IAR Systems and Industrivarden

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

The idea behind IAR Systems Group and Industrivarden AB ser 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..