Correlation Between Embellence Group and IAR Systems

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

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

Diversification Opportunities for Embellence Group and IAR Systems

0.56

Correlation Coefficient

Embellence Group  IAR Systems

Very weak diversification

The 3 months correlation between Embellence and IAR is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Embellence Group AB and IAR Systems Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAR Systems Group and Embellence Group 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 Embellence Group AB are associated (or correlated) with IAR Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAR Systems Group has no effect on the direction of Embellence Group i.e., Embellence Group and IAR Systems go up and down completely randomly.

Pair Corralation between Embellence Group and IAR Systems

Assuming the 90 days trading horizon Embellence Group is expected to generate 6.38 times less return on investment than IAR Systems. But when comparing it to its historical volatility, Embellence Group AB is 4.92 times less risky than IAR Systems. It trades about 0.1 of its potential returns per unit of risk. IAR Systems Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,894  in IAR Systems Group on April 24, 2025 and sell it today you would earn a total of  6,886  from holding IAR Systems Group or generate 63.21% return on investment over 90 days.

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

Embellence Group AB  vs.  IAR Systems Group

Embellence Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embellence Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Embellence Group may actually be approaching a critical reversion point that can send shares even higher in August 2025.

IAR Systems Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IAR Systems Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IAR Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Embellence Group and IAR Systems

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

The idea behind Embellence Group AB and IAR Systems Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.