Correlation Between S2Medical and Image Systems

Can any of the company-specific risk be diversified away by investing in both S2Medical 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 S2Medical and Image Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between S2Medical AB and Image Systems AB, you can compare the effects of market volatilities on S2Medical 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 S2Medical with a short position of Image Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of S2Medical and Image Systems.

Diversification Opportunities for S2Medical and Image Systems

0.43

Correlation Coefficient

S2Medical  Image Systems

Very weak diversification

The 3 months correlation between S2Medical and Image is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding S2Medical 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 S2Medical 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 S2Medical 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 S2Medical i.e., S2Medical and Image Systems go up and down completely randomly.

Pair Corralation between S2Medical and Image Systems

Assuming the 90 days trading horizon S2Medical AB is expected to generate 2.67 times more return on investment than Image Systems. However, S2Medical is 2.67 times more volatile than Image Systems AB. It trades about 0.07 of its potential returns per unit of risk. Image Systems AB is currently generating about -0.03 per unit of risk. If you would invest  1.22  in S2Medical AB on April 24, 2025 and sell it today you would earn a total of  0.20  from holding S2Medical AB or generate 16.39% return on investment over 90 days.

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

S2Medical AB  vs.  Image Systems AB

S2Medical AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in S2Medical AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting primary indicators, S2Medical unveiled 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 comparatively stable basic indicators, Image Systems is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with S2Medical and Image Systems

The main advantage of trading using opposite S2Medical and Image Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S2Medical 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 S2Medical 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..