Correlation Between Alimak Hek and IAR Systems
Can any of the company-specific risk be diversified away by investing in both Alimak Hek and IAR Systems 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 Alimak Hek and IAR Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alimak Hek Group and IAR Systems Group, you can compare the effects of market volatilities on Alimak Hek and IAR Systems 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 Alimak Hek with a short position of IAR Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alimak Hek and IAR Systems.
Diversification Opportunities for Alimak Hek and IAR Systems
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alimak and IAR is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Alimak Hek Group and IAR Systems Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAR Systems Group and Alimak Hek 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 Alimak Hek Group are associated (or correlated) with IAR Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAR Systems Group has no effect on the direction of Alimak Hek i.e., Alimak Hek and IAR Systems go up and down completely randomly.
Pair Corralation between Alimak Hek and IAR Systems
Assuming the 90 days trading horizon Alimak Hek Group is expected to under-perform the IAR Systems. But the stock apears to be less risky and, when comparing its historical volatility, Alimak Hek Group is 1.97 times less risky than IAR Systems. The stock trades about -0.07 of its potential returns per unit of risk. The IAR Systems Group is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 12,150 in IAR Systems Group on September 1, 2024 and sell it today you would earn a total of 2,350 from holding IAR Systems Group or generate 19.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alimak Hek Group vs. IAR Systems Group
Performance |
| Timeline |
| Alimak Hek Group |
| IAR Systems Group |
Alimak Hek and IAR Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alimak Hek and IAR Systems
The main advantage of trading using opposite Alimak Hek and IAR Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alimak Hek position performs unexpectedly, IAR Systems 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 IAR Systems will offset losses from the drop in IAR Systems' long position.| Alimak Hek vs. Samhllsbyggnadsbolaget i Norden | Alimak Hek vs. Sinch AB | Alimak Hek vs. Embracer Group AB | Alimak Hek vs. Evolution AB |
| IAR Systems vs. CellaVision AB | IAR Systems vs. HMS Networks AB | IAR Systems vs. Enea AB | IAR Systems vs. Know IT 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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