Correlation Between IAR Systems and Realfiction Holding
Can any of the company-specific risk be diversified away by investing in both IAR Systems and Realfiction Holding 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 Realfiction Holding 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 Realfiction Holding AB, you can compare the effects of market volatilities on IAR Systems and Realfiction Holding 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 Realfiction Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAR Systems and Realfiction Holding.
Diversification Opportunities for IAR Systems and Realfiction Holding
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IAR and Realfiction is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and Realfiction Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realfiction Holding 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 Realfiction Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realfiction Holding has no effect on the direction of IAR Systems i.e., IAR Systems and Realfiction Holding go up and down completely randomly.
Pair Corralation between IAR Systems and Realfiction Holding
Assuming the 90 days trading horizon IAR Systems Group is expected to generate 0.71 times more return on investment than Realfiction Holding. However, IAR Systems Group is 1.41 times less risky than Realfiction Holding. It trades about 0.06 of its potential returns per unit of risk. Realfiction Holding AB is currently generating about -0.01 per unit of risk. If you would invest 8,575 in IAR Systems Group on August 26, 2024 and sell it today you would earn a total of 4,225 from holding IAR Systems Group or generate 49.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAR Systems Group vs. Realfiction Holding AB
Performance |
| Timeline |
| IAR Systems Group |
| Realfiction Holding |
IAR Systems and Realfiction Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAR Systems and Realfiction Holding
The main advantage of trading using opposite IAR Systems and Realfiction Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAR Systems position performs unexpectedly, Realfiction Holding 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 Realfiction Holding will offset losses from the drop in Realfiction Holding's long position.| IAR Systems vs. Lifco AB | IAR Systems vs. Lagercrantz Group AB | IAR Systems vs. Addtech AB | IAR Systems vs. Instalco Intressenter AB |
| Realfiction Holding vs. Sivers IMA Holding | Realfiction Holding vs. AAC Clyde Space | Realfiction Holding vs. Kancera AB | Realfiction Holding vs. Bambuser 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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