Correlation Between Systemair and HCA Healthcare

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

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

Diversification Opportunities for Systemair and HCA Healthcare

-0.42

Correlation Coefficient

Systemair  HCA Healthcare

Very good diversification

The 3 months correlation between Systemair and HCA is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare 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 HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Systemair i.e., Systemair and HCA Healthcare go up and down completely randomly.

Pair Corralation between Systemair and HCA Healthcare

Assuming the 90 days trading horizon Systemair AB is expected to generate 0.85 times more return on investment than HCA Healthcare. However, Systemair AB is 1.18 times less risky than HCA Healthcare. It trades about 0.14 of its potential returns per unit of risk. HCA Healthcare is currently generating about -0.15 per unit of risk. If you would invest  8,040  in Systemair AB on September 3, 2024 and sell it today you would earn a total of  1,170  from holding Systemair AB or generate 14.55% return on investment over 90 days.

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

Systemair AB  vs.  HCA Healthcare

Systemair AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Systemair AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Systemair unveiled solid returns over the last few months and may actually be approaching a breakup point.

HCA Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Systemair and HCA Healthcare

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

The idea behind Systemair AB and HCA Healthcare 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.