Correlation Between Svedbergs and Systemair

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

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

Diversification Opportunities for Svedbergs and Systemair

-0.25

Correlation Coefficient

Svedbergs  Systemair

Very good diversification

The 3 months correlation between Svedbergs and Systemair is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Svedbergs i Dalstorp and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB and Svedbergs 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 Svedbergs i Dalstorp 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 Svedbergs i.e., Svedbergs and Systemair go up and down completely randomly.

Pair Corralation between Svedbergs and Systemair

Assuming the 90 days trading horizon Svedbergs i Dalstorp is expected to under-perform the Systemair. But the stock apears to be less risky and, when comparing its historical volatility, Svedbergs i Dalstorp is 1.0 times less risky than Systemair. The stock trades about 0.0 of its potential returns per unit of risk. The Systemair AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,130  in Systemair AB on September 4, 2024 and sell it today you would earn a total of  1,090  from holding Systemair AB or generate 13.41% return on investment over 90 days.

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

Svedbergs i Dalstorp  vs.  Systemair AB

Svedbergs i Dalstorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Svedbergs i Dalstorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Svedbergs is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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. In spite of comparatively uncertain basic indicators, Systemair unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Svedbergs and Systemair

The main advantage of trading using opposite Svedbergs and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svedbergs 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 Svedbergs i Dalstorp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.