Correlation Between Systemair and Zegona Communications
Can any of the company-specific risk be diversified away by investing in both Systemair and Zegona Communications 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 Zegona Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Systemair AB and Zegona Communications Plc, you can compare the effects of market volatilities on Systemair and Zegona Communications 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 Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Systemair and Zegona Communications.
Diversification Opportunities for Systemair and Zegona Communications
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Systemair and Zegona is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications 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 Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of Systemair i.e., Systemair and Zegona Communications go up and down completely randomly.
Pair Corralation between Systemair and Zegona Communications
Assuming the 90 days trading horizon Systemair AB is expected to under-perform the Zegona Communications. But the stock apears to be less risky and, when comparing its historical volatility, Systemair AB is 1.01 times less risky than Zegona Communications. The stock trades about -0.08 of its potential returns per unit of risk. The Zegona Communications Plc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 42,400 in Zegona Communications Plc on November 4, 2024 and sell it today you would earn a total of 4,600 from holding Zegona Communications Plc or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Systemair AB vs. Zegona Communications Plc
Performance |
| Timeline |
| Systemair AB |
| Zegona Communications Plc |
Systemair and Zegona Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Systemair and Zegona Communications
The main advantage of trading using opposite Systemair and Zegona Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Systemair position performs unexpectedly, Zegona Communications 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 Zegona Communications will offset losses from the drop in Zegona Communications' long position.| Systemair vs. Tyson Foods Cl | Systemair vs. Capital Drilling | Systemair vs. Spirent Communications plc | Systemair vs. Grieg Seafood |
| Zegona Communications vs. Liontrust Asset Management | Zegona Communications vs. Young Cos Brewery | Zegona Communications vs. JB Hunt Transport | Zegona Communications vs. Molson Coors Beverage |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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