Correlation Between Neola Medical and Systemair

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

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

Diversification Opportunities for Neola Medical and Systemair

0.2

Correlation Coefficient

Neola Medical  Systemair

Modest diversification

The 3 months correlation between Neola and Systemair is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Neola Medical AB and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB and Neola Medical 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 Neola Medical AB 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 Neola Medical i.e., Neola Medical and Systemair go up and down completely randomly.

Pair Corralation between Neola Medical and Systemair

Assuming the 90 days trading horizon Neola Medical AB is expected to under-perform the Systemair. In addition to that, Neola Medical is 2.07 times more volatile than Systemair AB. It trades about -0.06 of its total potential returns per unit of risk. Systemair AB is currently generating about 0.04 per unit of volatility. If you would invest  8,580  in Systemair AB on October 9, 2024 and sell it today you would earn a total of  290.00  from holding Systemair AB or generate 3.38% return on investment over 90 days.

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

Neola Medical AB  vs.  Systemair AB

Neola Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neola Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Systemair AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Systemair AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Systemair is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Neola Medical and Systemair

The main advantage of trading using opposite Neola Medical and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neola Medical 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 Neola Medical AB 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.