Correlation Between Systemair and Neola Medical
Can any of the company-specific risk be diversified away by investing in both Systemair and Neola Medical 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 Neola Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Systemair AB and Neola Medical AB, you can compare the effects of market volatilities on Systemair and Neola Medical 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 Neola Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Systemair and Neola Medical.
Diversification Opportunities for Systemair and Neola Medical
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Systemair and Neola is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Neola Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neola Medical AB 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 Neola Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neola Medical AB has no effect on the direction of Systemair i.e., Systemair and Neola Medical go up and down completely randomly.
Pair Corralation between Systemair and Neola Medical
Assuming the 90 days trading horizon Systemair is expected to generate 1.52 times less return on investment than Neola Medical. But when comparing it to its historical volatility, Systemair AB is 2.11 times less risky than Neola Medical. It trades about 0.07 of its potential returns per unit of risk. Neola Medical AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 160.00 in Neola Medical AB on September 12, 2024 and sell it today you would earn a total of 96.00 from holding Neola Medical AB or generate 60.0% 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. Neola Medical AB
Performance |
| Timeline |
| Systemair AB |
| Neola Medical AB |
Systemair and Neola Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Systemair and Neola Medical
The main advantage of trading using opposite Systemair and Neola Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Systemair position performs unexpectedly, Neola Medical 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 Neola Medical will offset losses from the drop in Neola Medical's long position.| Systemair vs. Lindab International AB | Systemair vs. Nolato AB | Systemair vs. Sweco AB | Systemair vs. Troax Group AB |
| Neola Medical vs. Nitro Games Oyj | Neola Medical vs. Lundin Mining | Neola Medical vs. JLT Mobile Computers | Neola Medical vs. Systemair 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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