Correlation Between Systemair and Lindab International
Can any of the company-specific risk be diversified away by investing in both Systemair and Lindab International 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 Lindab International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Systemair AB and Lindab International AB, you can compare the effects of market volatilities on Systemair and Lindab International 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 Lindab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Systemair and Lindab International.
Diversification Opportunities for Systemair and Lindab International
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Systemair and Lindab is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Lindab International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindab International 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 Lindab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindab International has no effect on the direction of Systemair i.e., Systemair and Lindab International go up and down completely randomly.
Pair Corralation between Systemair and Lindab International
Assuming the 90 days trading horizon Systemair AB is expected to generate 1.52 times more return on investment than Lindab International. However, Systemair is 1.52 times more volatile than Lindab International AB. It trades about 0.15 of its potential returns per unit of risk. Lindab International AB is currently generating about 0.07 per unit of risk. If you would invest 8,520 in Systemair AB on August 29, 2024 and sell it today you would earn a total of 690.00 from holding Systemair AB or generate 8.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Systemair AB vs. Lindab International AB
Performance |
| Timeline |
| Systemair AB |
| Lindab International |
Systemair and Lindab International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Systemair and Lindab International
The main advantage of trading using opposite Systemair and Lindab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Systemair position performs unexpectedly, Lindab International 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 Lindab International will offset losses from the drop in Lindab International's long position.| Systemair vs. Addtech AB | Systemair vs. Teqnion AB | Systemair vs. Vitec Software Group | Systemair vs. Lagercrantz Group AB |
| Lindab International vs. Addtech AB | Lindab International vs. Teqnion AB | Lindab International vs. Vitec Software Group | Lindab International vs. Lagercrantz 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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