Correlation Between Bulten AB and IAR Systems
Can any of the company-specific risk be diversified away by investing in both Bulten AB 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 Bulten AB and IAR Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bulten AB and IAR Systems Group, you can compare the effects of market volatilities on Bulten AB 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 Bulten AB with a short position of IAR Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bulten AB and IAR Systems.
Diversification Opportunities for Bulten AB and IAR Systems
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bulten and IAR is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bulten 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 Bulten AB 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 Bulten 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 Bulten AB i.e., Bulten AB and IAR Systems go up and down completely randomly.
Pair Corralation between Bulten AB and IAR Systems
Assuming the 90 days trading horizon Bulten AB is expected to under-perform the IAR Systems. But the stock apears to be less risky and, when comparing its historical volatility, Bulten AB is 1.33 times less risky than IAR Systems. The stock trades about -0.01 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 Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bulten AB vs. IAR Systems Group
Performance |
| Timeline |
| Bulten AB |
| IAR Systems Group |
Bulten AB and IAR Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bulten AB and IAR Systems
The main advantage of trading using opposite Bulten AB and IAR Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bulten AB 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.| Bulten AB vs. NetJobs Group AB | Bulten AB vs. Mantex AB | Bulten AB vs. Doxa AB | Bulten AB vs. Clean Motion 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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