Correlation Between New Wave and Systemair
Can any of the company-specific risk be diversified away by investing in both New Wave 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 New Wave and Systemair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Wave Group and Systemair AB, you can compare the effects of market volatilities on New Wave 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 New Wave with a short position of Systemair. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Wave and Systemair.
Diversification Opportunities for New Wave and Systemair
Very good diversification
The 3 months correlation between New and Systemair is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding New Wave Group and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB and New Wave 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 New Wave Group 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 New Wave i.e., New Wave and Systemair go up and down completely randomly.
Pair Corralation between New Wave and Systemair
Assuming the 90 days trading horizon New Wave Group is expected to under-perform the Systemair. In addition to that, New Wave is 1.08 times more volatile than Systemair AB. It trades about -0.17 of its total potential returns per unit of risk. Systemair AB is currently generating about 0.05 per unit of volatility. If you would invest 8,980 in Systemair AB on August 27, 2024 and sell it today you would earn a total of 350.00 from holding Systemair AB or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Wave Group vs. Systemair AB
Performance |
| Timeline |
| New Wave Group |
| Systemair AB |
New Wave and Systemair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Wave and Systemair
The main advantage of trading using opposite New Wave and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Wave 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.| New Wave vs. Hexatronic Group AB | New Wave vs. Inwido AB | New Wave vs. Lindab International AB | New Wave vs. Byggmax Group AB |
| Systemair vs. Lindab International AB | Systemair vs. Nolato AB | Systemair vs. Sweco AB | Systemair vs. Troax Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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