Correlation Between SYSTEMAIR and Vale SA
Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR and Vale SA 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 Vale SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYSTEMAIR AB and Vale SA, you can compare the effects of market volatilities on SYSTEMAIR and Vale SA 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 Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and Vale SA.
Diversification Opportunities for SYSTEMAIR and Vale SA
Very good diversification
The 3 months correlation between SYSTEMAIR and Vale is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and Vale SA go up and down completely randomly.
Pair Corralation between SYSTEMAIR and Vale SA
Assuming the 90 days trading horizon SYSTEMAIR AB is expected to generate 1.53 times more return on investment than Vale SA. However, SYSTEMAIR is 1.53 times more volatile than Vale SA. It trades about 0.05 of its potential returns per unit of risk. Vale SA is currently generating about -0.03 per unit of risk. If you would invest 413.00 in SYSTEMAIR AB on September 24, 2024 and sell it today you would earn a total of 363.00 from holding SYSTEMAIR AB or generate 87.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SYSTEMAIR AB vs. Vale SA
Performance |
| Timeline |
| SYSTEMAIR AB |
| Vale SA |
SYSTEMAIR and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SYSTEMAIR and Vale SA
The main advantage of trading using opposite SYSTEMAIR and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.The idea behind SYSTEMAIR AB and Vale SA 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.| Vale SA vs. AIR LIQUIDE ADR | Vale SA vs. SYSTEMAIR AB | Vale SA vs. SEALED AIR | Vale SA vs. Harmony Gold Mining |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stocks Directory Find actively traded stocks across global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |