Correlation Between Systemair and Neola Medical

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

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

Diversification Opportunities for Systemair and Neola Medical

0.2

Correlation Coefficient

Systemair  Neola Medical

Modest diversification

The 3 months correlation between Systemair and Neola is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Neola Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neola Medical AB 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 Neola Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neola Medical AB has no effect on the direction of Systemair i.e., Systemair and Neola Medical go up and down completely randomly.

Pair Corralation between Systemair and Neola Medical

Assuming the 90 days trading horizon Systemair AB is expected to generate 0.43 times more return on investment than Neola Medical. However, Systemair AB is 2.34 times less risky than Neola Medical. It trades about -0.25 of its potential returns per unit of risk. Neola Medical AB is currently generating about -0.27 per unit of risk. If you would invest  9,440  in Systemair AB on October 9, 2024 and sell it today you would lose (570.00) from holding Systemair AB or give up 6.04% of portfolio value over 90 days.

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

Systemair AB  vs.  Neola Medical AB

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.

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.

Pair Trading with Systemair and Neola Medical

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

The idea behind Systemair AB and Neola Medical 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.