Correlation Between SYSTEMAIR and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR and Dairy Farm 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 Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYSTEMAIR AB and Dairy Farm International, you can compare the effects of market volatilities on SYSTEMAIR and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and Dairy Farm.
Diversification Opportunities for SYSTEMAIR and Dairy Farm
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SYSTEMAIR and Dairy is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and Dairy Farm go up and down completely randomly.
Pair Corralation between SYSTEMAIR and Dairy Farm
Assuming the 90 days trading horizon SYSTEMAIR AB is expected to generate 1.44 times more return on investment than Dairy Farm. However, SYSTEMAIR is 1.44 times more volatile than Dairy Farm International. It trades about -0.07 of its potential returns per unit of risk. Dairy Farm International is currently generating about -0.11 per unit of risk. If you would invest 782.00 in SYSTEMAIR AB on October 30, 2024 and sell it today you would lose (67.00) from holding SYSTEMAIR AB or give up 8.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SYSTEMAIR AB vs. Dairy Farm International
Performance |
| Timeline |
| SYSTEMAIR AB |
| Dairy Farm International |
SYSTEMAIR and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SYSTEMAIR and Dairy Farm
The main advantage of trading using opposite SYSTEMAIR and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| SYSTEMAIR vs. CN MODERN DAIRY | SYSTEMAIR vs. Axfood AB | SYSTEMAIR vs. Goodyear Tire Rubber | SYSTEMAIR vs. Lery Seafood Group |
| Dairy Farm vs. FORWARD AIR P | Dairy Farm vs. Westinghouse Air Brake | Dairy Farm vs. SYSTEMAIR AB | Dairy Farm vs. Wizz Air Holdings |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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