Correlation Between Mekonomen and IAR Systems
Can any of the company-specific risk be diversified away by investing in both Mekonomen and IAR Systems 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 Mekonomen and IAR Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mekonomen AB and IAR Systems Group, you can compare the effects of market volatilities on Mekonomen and IAR Systems 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 Mekonomen with a short position of IAR Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekonomen and IAR Systems.
Diversification Opportunities for Mekonomen and IAR Systems
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mekonomen and IAR is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and IAR Systems Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAR Systems Group and Mekonomen 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 Mekonomen AB are associated (or correlated) with IAR Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAR Systems Group has no effect on the direction of Mekonomen i.e., Mekonomen and IAR Systems go up and down completely randomly.
Pair Corralation between Mekonomen and IAR Systems
Assuming the 90 days trading horizon Mekonomen is expected to generate 22.94 times less return on investment than IAR Systems. But when comparing it to its historical volatility, Mekonomen AB is 2.52 times less risky than IAR Systems. It trades about 0.02 of its potential returns per unit of risk. IAR Systems Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 11,650 in IAR Systems Group on November 7, 2024 and sell it today you would earn a total of 1,150 from holding IAR Systems Group or generate 9.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mekonomen AB vs. IAR Systems Group
Performance |
| Timeline |
| Mekonomen AB |
| IAR Systems Group |
Mekonomen and IAR Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mekonomen and IAR Systems
The main advantage of trading using opposite Mekonomen and IAR Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mekonomen position performs unexpectedly, IAR Systems 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 IAR Systems will offset losses from the drop in IAR Systems' long position.| Mekonomen vs. Clas Ohlson AB | Mekonomen vs. Bilia AB | Mekonomen vs. Byggmax Group AB | Mekonomen vs. Peab AB |
| IAR Systems vs. CellaVision AB | IAR Systems vs. HMS Networks AB | IAR Systems vs. Enea AB | IAR Systems vs. Know IT 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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