Correlation Between Systemair and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Systemair and Cairn Homes 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 Systemair and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Systemair AB and Cairn Homes PLC, you can compare the effects of market volatilities on Systemair and Cairn Homes 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 Systemair with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Systemair and Cairn Homes.
Diversification Opportunities for Systemair and Cairn Homes
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Systemair and Cairn is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and Systemair 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 Systemair AB are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Systemair i.e., Systemair and Cairn Homes go up and down completely randomly.
Pair Corralation between Systemair and Cairn Homes
Assuming the 90 days trading horizon Systemair AB is expected to under-perform the Cairn Homes. In addition to that, Systemair is 1.5 times more volatile than Cairn Homes PLC. It trades about -0.08 of its total potential returns per unit of risk. Cairn Homes PLC is currently generating about -0.07 per unit of volatility. If you would invest 19,440 in Cairn Homes PLC on November 6, 2024 and sell it today you would lose (600.00) from holding Cairn Homes PLC or give up 3.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Systemair AB vs. Cairn Homes PLC
Performance |
| Timeline |
| Systemair AB |
| Cairn Homes PLC |
Systemair and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Systemair and Cairn Homes
The main advantage of trading using opposite Systemair and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Systemair position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Systemair vs. Live Nation Entertainment | Systemair vs. Concurrent Technologies Plc | Systemair vs. AcadeMedia AB | Systemair vs. Atresmedia |
| Cairn Homes vs. Universal Health Services | Cairn Homes vs. Naturhouse Health SA | Cairn Homes vs. EJF Investments | Cairn Homes vs. Cardinal Health |
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..
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