Correlation Between Lifecare and HAV Group

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

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

Diversification Opportunities for Lifecare and HAV Group

-0.25

Correlation Coefficient

Lifecare  HAV Group

Very good diversification

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

Pair Corralation between Lifecare and HAV Group

Assuming the 90 days trading horizon Lifecare AS is expected to under-perform the HAV Group. In addition to that, Lifecare is 1.32 times more volatile than HAV Group ASA. It trades about -0.01 of its total potential returns per unit of risk. HAV Group ASA is currently generating about 0.08 per unit of volatility. 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

Lifecare AS  vs.  HAV Group ASA

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.

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.

Pair Trading with Lifecare and HAV Group

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

The idea behind Lifecare AS and HAV Group ASA 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.