Correlation Between SYSTEMAIR and HF SINCLAIR

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

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

Diversification Opportunities for SYSTEMAIR and HF SINCLAIR

0.17

Correlation Coefficient

SYSTEMAIR  HF SINCLAIR

Average diversification

The 3 months correlation between SYSTEMAIR and HL80 is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and HF SINCLAIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF SINCLAIR P 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 HF SINCLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF SINCLAIR P has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and HF SINCLAIR go up and down completely randomly.

Pair Corralation between SYSTEMAIR and HF SINCLAIR

Assuming the 90 days trading horizon SYSTEMAIR AB is expected to under-perform the HF SINCLAIR. But the stock apears to be less risky and, when comparing its historical volatility, SYSTEMAIR AB is 1.28 times less risky than HF SINCLAIR. The stock trades about -0.06 of its potential returns per unit of risk. The HF SINCLAIR P is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,188  in HF SINCLAIR P on December 30, 2024 and sell it today you would lose (188.00) from holding HF SINCLAIR P or give up 5.9% of portfolio value over 90 days.

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

SYSTEMAIR AB  vs.  HF SINCLAIR P

SYSTEMAIR AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days SYSTEMAIR AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

HF SINCLAIR P

Risk-Adjusted Performance

Very Weak

Over the last 90 days HF SINCLAIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HF SINCLAIR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SYSTEMAIR and HF SINCLAIR

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

The idea behind SYSTEMAIR AB and HF SINCLAIR P 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.