Correlation Between SYSTEMAIR and HEINEKEN

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

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

Diversification Opportunities for SYSTEMAIR and HEINEKEN

-0.62

Correlation Coefficient

SYSTEMAIR  HEINEKEN

Excellent diversification

The 3 months correlation between SYSTEMAIR and HEINEKEN is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and HEINEKEN SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEINEKEN SP ADR 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 HEINEKEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEINEKEN SP ADR has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and HEINEKEN go up and down completely randomly.

Pair Corralation between SYSTEMAIR and HEINEKEN

Assuming the 90 days trading horizon SYSTEMAIR AB is expected to generate 2.37 times more return on investment than HEINEKEN. However, SYSTEMAIR is 2.37 times more volatile than HEINEKEN SP ADR. It trades about 0.05 of its potential returns per unit of risk. HEINEKEN SP ADR is currently generating about -0.03 per unit of risk. If you would invest  426.00  in SYSTEMAIR AB on October 11, 2024 and sell it today you would earn a total of  346.00  from holding SYSTEMAIR AB or generate 81.22% return on investment over 90 days.

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

SYSTEMAIR AB  vs.  HEINEKEN SP ADR

SYSTEMAIR AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SYSTEMAIR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HEINEKEN SP ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEINEKEN SP ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SYSTEMAIR and HEINEKEN

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

The idea behind SYSTEMAIR AB and HEINEKEN SP ADR 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.