Correlation Between Systemair and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Systemair and Rio Tinto 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 Rio Tinto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Systemair AB and Rio Tinto PLC, you can compare the effects of market volatilities on Systemair and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Systemair and Rio Tinto.
Diversification Opportunities for Systemair and Rio Tinto
Good diversification
The 3 months correlation between Systemair and Rio is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Rio Tinto PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto PLC has no effect on the direction of Systemair i.e., Systemair and Rio Tinto go up and down completely randomly.
Pair Corralation between Systemair and Rio Tinto
Assuming the 90 days trading horizon Systemair AB is expected to under-perform the Rio Tinto. In addition to that, Systemair is 1.07 times more volatile than Rio Tinto PLC. It trades about -0.51 of its total potential returns per unit of risk. Rio Tinto PLC is currently generating about -0.27 per unit of volatility. If you would invest 508,300 in Rio Tinto PLC on October 12, 2024 and sell it today you would lose (27,700) from holding Rio Tinto PLC or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Systemair AB vs. Rio Tinto PLC
Performance |
| Timeline |
| Systemair AB |
| Rio Tinto PLC |
Systemair and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Systemair and Rio Tinto
The main advantage of trading using opposite Systemair and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Systemair position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Systemair vs. Bisichi Mining PLC | Systemair vs. Thor Mining PLC | Systemair vs. Deltex Medical Group | Systemair vs. Advanced Medical Solutions |
| Rio Tinto vs. Seraphim Space Investment | Rio Tinto vs. FC Investment Trust | Rio Tinto vs. Canadian General Investments | Rio Tinto vs. Trellus Health plc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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