Correlation Between HAV Group and Lifecare

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

By analyzing existing cross correlation between HAV Group ASA and Lifecare AS, you can compare the effects of market volatilities on HAV Group and Lifecare 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 HAV Group with a short position of Lifecare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HAV Group and Lifecare.

Diversification Opportunities for HAV Group and Lifecare

-0.25

Correlation Coefficient

HAV Group  Lifecare

Very good diversification

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

Pair Corralation between HAV Group and Lifecare

Assuming the 90 days trading horizon HAV Group ASA is expected to generate 0.76 times more return on investment than Lifecare. However, HAV Group ASA is 1.32 times less risky than Lifecare. It trades about 0.08 of its potential returns per unit of risk. Lifecare AS is currently generating about -0.01 per unit of risk. If you would invest  628.00  in HAV Group ASA on December 30, 2024 and sell it today you would earn a total of  108.00  from holding HAV Group ASA or generate 17.2% return on investment over 90 days.

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

HAV Group ASA  vs.  Lifecare AS

HAV Group ASA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HAV Group ASA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, HAV Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Lifecare AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifecare AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Lifecare is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with HAV Group and Lifecare

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

The idea behind HAV Group ASA and Lifecare AS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.