Correlation Between Garo AB and Image Systems
Can any of the company-specific risk be diversified away by investing in both Garo AB and Image 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 Garo AB and Image Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garo AB and Image Systems AB, you can compare the effects of market volatilities on Garo AB and Image 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 Garo AB with a short position of Image Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garo AB and Image Systems.
Diversification Opportunities for Garo AB and Image Systems
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Garo and Image is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Garo AB and Image Systems AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Image Systems AB and Garo 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 Garo AB are associated (or correlated) with Image Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Image Systems AB has no effect on the direction of Garo AB i.e., Garo AB and Image Systems go up and down completely randomly.
Pair Corralation between Garo AB and Image Systems
Assuming the 90 days trading horizon Garo AB is expected to under-perform the Image Systems. But the stock apears to be less risky and, when comparing its historical volatility, Garo AB is 1.22 times less risky than Image Systems. The stock trades about -0.07 of its potential returns per unit of risk. The Image Systems AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Image Systems AB on September 4, 2024 and sell it today you would earn a total of 105.00 from holding Image Systems AB or generate 110.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garo AB vs. Image Systems AB
Performance |
| Timeline |
| Garo AB |
| Image Systems AB |
Garo AB and Image Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garo AB and Image Systems
The main advantage of trading using opposite Garo AB and Image Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garo AB position performs unexpectedly, Image 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 Image Systems will offset losses from the drop in Image Systems' long position.The idea behind Garo AB and Image Systems AB 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.| Image Systems vs. Anoto Group AB | Image Systems vs. Bong AB | Image Systems vs. Episurf Medical AB | Image Systems vs. Eniro 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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