Correlation Between London Security and Systemair
Can any of the company-specific risk be diversified away by investing in both London Security and Systemair 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 London Security and Systemair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Systemair AB, you can compare the effects of market volatilities on London Security and Systemair 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 London Security with a short position of Systemair. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Systemair.
Diversification Opportunities for London Security and Systemair
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between London and Systemair is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB and London Security 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 London Security Plc are associated (or correlated) with Systemair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systemair AB has no effect on the direction of London Security i.e., London Security and Systemair go up and down completely randomly.
Pair Corralation between London Security and Systemair
Assuming the 90 days trading horizon London Security is expected to generate 1.83 times less return on investment than Systemair. But when comparing it to its historical volatility, London Security Plc is 2.2 times less risky than Systemair. It trades about 0.07 of its potential returns per unit of risk. Systemair AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,609 in Systemair AB on September 26, 2024 and sell it today you would earn a total of 2,321 from holding Systemair AB or generate 35.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.37% |
| Values | Daily Returns |
London Security Plc vs. Systemair AB
Performance |
| Timeline |
| London Security Plc |
| Systemair AB |
London Security and Systemair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Systemair
The main advantage of trading using opposite London Security and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security position performs unexpectedly, Systemair 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 Systemair will offset losses from the drop in Systemair's long position.| London Security vs. Tungsten West PLC | London Security vs. Argo Group Limited | London Security vs. Hardide PLC | London Security vs. Gfinity PLC |
| Systemair vs. Uniper SE | Systemair vs. Mulberry Group PLC | Systemair vs. London Security Plc | Systemair vs. Triad Group PLC |
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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