Correlation Between Smart Eye and IAR Systems
Can any of the company-specific risk be diversified away by investing in both Smart Eye 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 Smart Eye and IAR Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Eye AB and IAR Systems Group, you can compare the effects of market volatilities on Smart Eye 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 Smart Eye with a short position of IAR Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Eye and IAR Systems.
Diversification Opportunities for Smart Eye and IAR Systems
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smart and IAR is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Smart Eye 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 Smart Eye 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 Smart Eye 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 Smart Eye i.e., Smart Eye and IAR Systems go up and down completely randomly.
Pair Corralation between Smart Eye and IAR Systems
Assuming the 90 days trading horizon Smart Eye AB is expected to under-perform the IAR Systems. In addition to that, Smart Eye is 1.57 times more volatile than IAR Systems Group. It trades about -0.13 of its total potential returns per unit of risk. IAR Systems Group is currently generating about 0.17 per unit of volatility. If you would invest 12,500 in IAR Systems Group on August 31, 2024 and sell it today you would earn a total of 950.00 from holding IAR Systems Group or generate 7.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smart Eye AB vs. IAR Systems Group
Performance |
| Timeline |
| Smart Eye AB |
| IAR Systems Group |
Smart Eye and IAR Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Eye and IAR Systems
The main advantage of trading using opposite Smart Eye and IAR Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Eye 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.| Smart Eye vs. Catena Media plc | Smart Eye vs. Kambi Group PLC | Smart Eye vs. Betsson AB | Smart Eye vs. Invisio Communications 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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