Correlation Between Softronic and Micro Systemation
Can any of the company-specific risk be diversified away by investing in both Softronic and Micro Systemation 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 Softronic and Micro Systemation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softronic AB and Micro Systemation AB, you can compare the effects of market volatilities on Softronic and Micro Systemation 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 Softronic with a short position of Micro Systemation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softronic and Micro Systemation.
Diversification Opportunities for Softronic and Micro Systemation
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Softronic and Micro is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and Micro Systemation AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Systemation and Softronic 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 Softronic AB are associated (or correlated) with Micro Systemation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Systemation has no effect on the direction of Softronic i.e., Softronic and Micro Systemation go up and down completely randomly.
Pair Corralation between Softronic and Micro Systemation
Assuming the 90 days trading horizon Softronic AB is expected to generate 0.7 times more return on investment than Micro Systemation. However, Softronic AB is 1.42 times less risky than Micro Systemation. It trades about 0.12 of its potential returns per unit of risk. Micro Systemation AB is currently generating about -0.02 per unit of risk. If you would invest 2,365 in Softronic AB on September 3, 2024 and sell it today you would earn a total of 70.00 from holding Softronic AB or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Softronic AB vs. Micro Systemation AB
Performance |
| Timeline |
| Softronic AB |
| Micro Systemation |
Softronic and Micro Systemation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softronic and Micro Systemation
The main advantage of trading using opposite Softronic and Micro Systemation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softronic position performs unexpectedly, Micro Systemation 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 Micro Systemation will offset losses from the drop in Micro Systemation's long position.| Softronic vs. Svenska Aerogel Holding | Softronic vs. Acarix AS | Softronic vs. Clean Motion AB | Softronic vs. AroCell AB |
| Micro Systemation vs. Novotek AB | Micro Systemation vs. FormPipe Software AB | Micro Systemation vs. Softronic AB | Micro Systemation vs. Prevas 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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