Correlation Between IAR Systems and SpectraCure
Can any of the company-specific risk be diversified away by investing in both IAR Systems and SpectraCure 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 SpectraCure 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 SpectraCure AB, you can compare the effects of market volatilities on IAR Systems and SpectraCure 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 SpectraCure. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAR Systems and SpectraCure.
Diversification Opportunities for IAR Systems and SpectraCure
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IAR and SpectraCure is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and SpectraCure AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpectraCure 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 SpectraCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpectraCure AB has no effect on the direction of IAR Systems i.e., IAR Systems and SpectraCure go up and down completely randomly.
Pair Corralation between IAR Systems and SpectraCure
Assuming the 90 days trading horizon IAR Systems Group is expected to generate 0.27 times more return on investment than SpectraCure. However, IAR Systems Group is 3.77 times less risky than SpectraCure. It trades about 0.04 of its potential returns per unit of risk. SpectraCure AB is currently generating about -0.03 per unit of risk. If you would invest 12,600 in IAR Systems Group on August 29, 2024 and sell it today you would earn a total of 150.00 from holding IAR Systems Group or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAR Systems Group vs. SpectraCure AB
Performance |
| Timeline |
| IAR Systems Group |
| SpectraCure AB |
IAR Systems and SpectraCure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAR Systems and SpectraCure
The main advantage of trading using opposite IAR Systems and SpectraCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAR Systems position performs unexpectedly, SpectraCure 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 SpectraCure will offset losses from the drop in SpectraCure'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 |
| SpectraCure vs. KABE Group AB | SpectraCure vs. IAR Systems Group | SpectraCure vs. Mekonomen AB | SpectraCure vs. Clinical Laserthermia Systems |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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