Correlation Between Systemair and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Systemair and Leading Edge 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 Systemair and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Systemair AB and Leading Edge Materials, you can compare the effects of market volatilities on Systemair and Leading Edge 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 Systemair with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Systemair and Leading Edge.
Diversification Opportunities for Systemair and Leading Edge
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Systemair and Leading is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Leading Edge Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leading Edge Materials and Systemair 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 Systemair AB are associated (or correlated) with Leading Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leading Edge Materials has no effect on the direction of Systemair i.e., Systemair and Leading Edge go up and down completely randomly.
Pair Corralation between Systemair and Leading Edge
Assuming the 90 days trading horizon Systemair AB is expected to generate 1.13 times more return on investment than Leading Edge. However, Systemair is 1.13 times more volatile than Leading Edge Materials. It trades about 0.23 of its potential returns per unit of risk. Leading Edge Materials is currently generating about -0.15 per unit of risk. If you would invest 8,150 in Systemair AB on September 2, 2024 and sell it today you would earn a total of 1,000.00 from holding Systemair AB or generate 12.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Systemair AB vs. Leading Edge Materials
Performance |
| Timeline |
| Systemair AB |
| Leading Edge Materials |
Systemair and Leading Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Systemair and Leading Edge
The main advantage of trading using opposite Systemair and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Systemair position performs unexpectedly, Leading Edge 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 Leading Edge will offset losses from the drop in Leading Edge's long position.| Systemair vs. Lindab International AB | Systemair vs. Nolato AB | Systemair vs. Sweco AB | Systemair vs. Troax Group AB |
| Leading Edge vs. Boliden AB | Leading Edge vs. KABE Group AB | Leading Edge vs. IAR Systems Group | Leading Edge vs. Norva24 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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