Correlation Between Systemair and Neometals

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

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

Diversification Opportunities for Systemair and Neometals

-0.09

Correlation Coefficient

Systemair  Neometals

Good diversification

The 3 months correlation between Systemair and Neometals is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Systemair i.e., Systemair and Neometals go up and down completely randomly.

Pair Corralation between Systemair and Neometals

Assuming the 90 days trading horizon Systemair AB is expected to generate 0.49 times more return on investment than Neometals. However, Systemair AB is 2.05 times less risky than Neometals. It trades about 0.03 of its potential returns per unit of risk. Neometals is currently generating about -0.09 per unit of risk. If you would invest  7,576  in Systemair AB on October 22, 2024 and sell it today you would earn a total of  1,404  from holding Systemair AB or generate 18.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Systemair AB  vs.  Neometals

Systemair AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Systemair AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Systemair may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Neometals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Systemair and Neometals

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

The idea behind Systemair AB and Neometals 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.