Correlation Between IAR Systems and Eastnine
Can any of the company-specific risk be diversified away by investing in both IAR Systems and Eastnine 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 IAR Systems and Eastnine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAR Systems Group and Eastnine AB, you can compare the effects of market volatilities on IAR Systems and Eastnine 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 IAR Systems with a short position of Eastnine. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAR Systems and Eastnine.
Diversification Opportunities for IAR Systems and Eastnine
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IAR and Eastnine is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and Eastnine AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastnine AB and IAR Systems 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 IAR Systems Group are associated (or correlated) with Eastnine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastnine AB has no effect on the direction of IAR Systems i.e., IAR Systems and Eastnine go up and down completely randomly.
Pair Corralation between IAR Systems and Eastnine
Assuming the 90 days trading horizon IAR Systems Group is expected to generate 1.9 times more return on investment than Eastnine. However, IAR Systems is 1.9 times more volatile than Eastnine AB. It trades about 0.05 of its potential returns per unit of risk. Eastnine AB is currently generating about 0.07 per unit of risk. If you would invest 11,018 in IAR Systems Group on September 14, 2024 and sell it today you would earn a total of 3,282 from holding IAR Systems Group or generate 29.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAR Systems Group vs. Eastnine AB
Performance |
| Timeline |
| IAR Systems Group |
| Eastnine AB |
IAR Systems and Eastnine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAR Systems and Eastnine
The main advantage of trading using opposite IAR Systems and Eastnine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAR Systems position performs unexpectedly, Eastnine 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 Eastnine will offset losses from the drop in Eastnine's long position.| IAR Systems vs. Lime Technologies AB | IAR Systems vs. FormPipe Software AB | IAR Systems vs. Surgical Science Sweden | IAR Systems vs. Teqnion AB |
| Eastnine vs. Catella AB | Eastnine vs. Catella AB A | Eastnine vs. KABE Group AB | Eastnine vs. IAR Systems Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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