Correlation Between IAR Systems and Sdiptech
Can any of the company-specific risk be diversified away by investing in both IAR Systems and Sdiptech 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 Sdiptech 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 Sdiptech AB, you can compare the effects of market volatilities on IAR Systems and Sdiptech 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 Sdiptech. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAR Systems and Sdiptech.
Diversification Opportunities for IAR Systems and Sdiptech
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IAR and Sdiptech is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and Sdiptech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sdiptech 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 Sdiptech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sdiptech AB has no effect on the direction of IAR Systems i.e., IAR Systems and Sdiptech go up and down completely randomly.
Pair Corralation between IAR Systems and Sdiptech
Assuming the 90 days trading horizon IAR Systems Group is expected to generate 1.28 times more return on investment than Sdiptech. However, IAR Systems is 1.28 times more volatile than Sdiptech AB. It trades about -0.09 of its potential returns per unit of risk. Sdiptech AB is currently generating about -0.16 per unit of risk. If you would invest 17,450 in IAR Systems Group on August 29, 2024 and sell it today you would lose (4,700) from holding IAR Systems Group or give up 26.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAR Systems Group vs. Sdiptech AB
Performance |
| Timeline |
| IAR Systems Group |
| Sdiptech AB |
IAR Systems and Sdiptech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAR Systems and Sdiptech
The main advantage of trading using opposite IAR Systems and Sdiptech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAR Systems position performs unexpectedly, Sdiptech 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 Sdiptech will offset losses from the drop in Sdiptech's long position.| IAR Systems vs. CellaVision AB | IAR Systems vs. HMS Networks AB | IAR Systems vs. Enea AB | IAR Systems vs. Know IT AB |
| Sdiptech vs. Instalco Intressenter AB | Sdiptech vs. Lifco AB | Sdiptech vs. Vitec Software Group | Sdiptech vs. Addtech 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |