Correlation Between SYSTEMAIR and Perma-Fix Environmental
Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR and Perma-Fix Environmental 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 Perma-Fix Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYSTEMAIR AB and Perma Fix Environmental Services, you can compare the effects of market volatilities on SYSTEMAIR and Perma-Fix Environmental 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 Perma-Fix Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and Perma-Fix Environmental.
Diversification Opportunities for SYSTEMAIR and Perma-Fix Environmental
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SYSTEMAIR and Perma-Fix is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental 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 Perma-Fix Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and Perma-Fix Environmental go up and down completely randomly.
Pair Corralation between SYSTEMAIR and Perma-Fix Environmental
Assuming the 90 days trading horizon SYSTEMAIR is expected to generate 2.22 times less return on investment than Perma-Fix Environmental. But when comparing it to its historical volatility, SYSTEMAIR AB is 1.42 times less risky than Perma-Fix Environmental. It trades about 0.06 of its potential returns per unit of risk. Perma Fix Environmental Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 334.00 in Perma Fix Environmental Services on August 28, 2024 and sell it today you would earn a total of 1,036 from holding Perma Fix Environmental Services or generate 310.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SYSTEMAIR AB vs. Perma Fix Environmental Servic
Performance |
| Timeline |
| SYSTEMAIR AB |
| Perma Fix Environmental |
SYSTEMAIR and Perma-Fix Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SYSTEMAIR and Perma-Fix Environmental
The main advantage of trading using opposite SYSTEMAIR and Perma-Fix Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR position performs unexpectedly, Perma-Fix Environmental 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 Perma-Fix Environmental will offset losses from the drop in Perma-Fix Environmental's long position.The idea behind SYSTEMAIR AB and Perma Fix Environmental Services 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.| Perma-Fix Environmental vs. Superior Plus Corp | Perma-Fix Environmental vs. NMI Holdings | Perma-Fix Environmental vs. Origin Agritech | Perma-Fix Environmental vs. SIVERS SEMICONDUCTORS AB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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