Correlation Between Vulcan Materials and Systemair

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

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

Diversification Opportunities for Vulcan Materials and Systemair

0.25

Correlation Coefficient

Vulcan Materials  Systemair

Modest diversification

The 3 months correlation between Vulcan and Systemair is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB and Vulcan Materials 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 Vulcan Materials Co are associated (or correlated) with Systemair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systemair AB has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Systemair go up and down completely randomly.

Pair Corralation between Vulcan Materials and Systemair

Assuming the 90 days trading horizon Vulcan Materials Co is expected to generate 0.74 times more return on investment than Systemair. However, Vulcan Materials Co is 1.34 times less risky than Systemair. It trades about 0.06 of its potential returns per unit of risk. Systemair AB is currently generating about 0.02 per unit of risk. If you would invest  25,780  in Vulcan Materials Co on October 25, 2024 and sell it today you would earn a total of  1,647  from holding Vulcan Materials Co or generate 6.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Vulcan Materials Co  vs.  Systemair AB

Vulcan Materials

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vulcan Materials may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Systemair AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Systemair AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Systemair 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 Vulcan Materials and Systemair

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

The idea behind Vulcan Materials Co and Systemair 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.