Correlation Between Avensia Publ and IAR Systems
Can any of the company-specific risk be diversified away by investing in both Avensia Publ 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 Avensia Publ and IAR Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avensia publ AB and IAR Systems Group, you can compare the effects of market volatilities on Avensia Publ 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 Avensia Publ with a short position of IAR Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avensia Publ and IAR Systems.
Diversification Opportunities for Avensia Publ and IAR Systems
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Avensia and IAR is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Avensia publ AB 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 Avensia Publ 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 Avensia publ AB 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 Avensia Publ i.e., Avensia Publ and IAR Systems go up and down completely randomly.
Pair Corralation between Avensia Publ and IAR Systems
Assuming the 90 days trading horizon Avensia Publ is expected to generate 22.48 times less return on investment than IAR Systems. But when comparing it to its historical volatility, Avensia publ AB is 1.0 times less risky than IAR Systems. It trades about 0.0 of its potential returns per unit of risk. IAR Systems Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,199 in IAR Systems Group on August 29, 2024 and sell it today you would earn a total of 4,551 from holding IAR Systems Group or generate 55.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avensia publ AB vs. IAR Systems Group
Performance |
| Timeline |
| Avensia publ AB |
| IAR Systems Group |
Avensia Publ and IAR Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avensia Publ and IAR Systems
The main advantage of trading using opposite Avensia Publ and IAR Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avensia Publ 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.| Avensia Publ vs. FormPipe Software AB | Avensia Publ vs. Micro Systemation AB | Avensia Publ vs. CTT Systems AB | Avensia Publ vs. CAG Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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