Correlation Between ASSA ABLOY and Image Systems

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

By analyzing existing cross correlation between ASSA ABLOY AB and Image Systems AB, you can compare the effects of market volatilities on ASSA ABLOY and Image 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 ASSA ABLOY with a short position of Image Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSA ABLOY and Image Systems.

Diversification Opportunities for ASSA ABLOY and Image Systems

-0.06

Correlation Coefficient

ASSA ABLOY  Image Systems

Good diversification

The 3 months correlation between ASSA and Image is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and Image Systems AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Image Systems AB and ASSA ABLOY 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 ASSA ABLOY AB are associated (or correlated) with Image Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Image Systems AB has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and Image Systems go up and down completely randomly.

Pair Corralation between ASSA ABLOY and Image Systems

Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.46 times more return on investment than Image Systems. However, ASSA ABLOY AB is 2.17 times less risky than Image Systems. It trades about 0.19 of its potential returns per unit of risk. Image Systems AB is currently generating about -0.05 per unit of risk. If you would invest  27,273  in ASSA ABLOY AB on April 20, 2025 and sell it today you would earn a total of  4,727  from holding ASSA ABLOY AB or generate 17.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

ASSA ABLOY AB  vs.  Image Systems AB

ASSA ABLOY AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASSA ABLOY AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASSA ABLOY sustained solid returns over the last few months and may actually be approaching a breakup point.

Image Systems AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Image Systems AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ASSA ABLOY and Image Systems

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

The idea behind ASSA ABLOY AB and Image Systems 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.