Correlation Between Heavitree Brewery and Systemair

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

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

Diversification Opportunities for Heavitree Brewery and Systemair

-0.73

Correlation Coefficient

Heavitree Brewery  Systemair

Pay attention - limited upside

The 3 months correlation between Heavitree and Systemair is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Heavitree Brewery and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB and Heavitree Brewery 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 Heavitree Brewery 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 Heavitree Brewery i.e., Heavitree Brewery and Systemair go up and down completely randomly.

Pair Corralation between Heavitree Brewery and Systemair

Assuming the 90 days trading horizon Heavitree Brewery is expected to under-perform the Systemair. But the stock apears to be less risky and, when comparing its historical volatility, Heavitree Brewery is 5.8 times less risky than Systemair. The stock trades about -0.13 of its potential returns per unit of risk. The Systemair AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8,201  in Systemair AB on October 23, 2024 and sell it today you would lose (31.00) from holding Systemair AB or give up 0.38% of portfolio value over 90 days.

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

Heavitree Brewery  vs.  Systemair AB

Heavitree Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heavitree Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Heavitree Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Systemair AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Systemair AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Systemair is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Heavitree Brewery and Systemair

The main advantage of trading using opposite Heavitree Brewery and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heavitree Brewery 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 Heavitree Brewery 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.