Correlation Between SYSTEMAIR and FORMPIPE SOFTWARE

Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SYSTEMAIR AB and FORMPIPE SOFTWARE AB, you can compare the effects of market volatilities on SYSTEMAIR and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and FORMPIPE SOFTWARE.

Diversification Opportunities for SYSTEMAIR and FORMPIPE SOFTWARE

0.71

Correlation Coefficient

SYSTEMAIR  FORMPIPE SOFTWARE

Poor diversification

The 3 months correlation between SYSTEMAIR and FORMPIPE is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and FORMPIPE SOFTWARE go up and down completely randomly.

Pair Corralation between SYSTEMAIR and FORMPIPE SOFTWARE

Assuming the 90 days trading horizon SYSTEMAIR AB is expected to generate 0.77 times more return on investment than FORMPIPE SOFTWARE. However, SYSTEMAIR AB is 1.29 times less risky than FORMPIPE SOFTWARE. It trades about 0.15 of its potential returns per unit of risk. FORMPIPE SOFTWARE AB is currently generating about 0.05 per unit of risk. If you would invest  699.00  in SYSTEMAIR AB on April 24, 2025 and sell it today you would earn a total of  133.00  from holding SYSTEMAIR AB or generate 19.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SYSTEMAIR AB  vs.  FORMPIPE SOFTWARE AB

SYSTEMAIR AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SYSTEMAIR reported solid returns over the last few months and may actually be approaching a breakup point.

FORMPIPE SOFTWARE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FORMPIPE SOFTWARE AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FORMPIPE SOFTWARE may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with SYSTEMAIR and FORMPIPE SOFTWARE

The main advantage of trading using opposite SYSTEMAIR and FORMPIPE SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR position performs unexpectedly, FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE will offset losses from the drop in FORMPIPE SOFTWARE's long position.

The idea behind SYSTEMAIR AB and FORMPIPE SOFTWARE AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..