Correlation Between Alimak Hek and Cavotec SA

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

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

Diversification Opportunities for Alimak Hek and Cavotec SA

0.59

Correlation Coefficient

Alimak Hek  Cavotec SA

Very weak diversification

The 3 months correlation between Alimak and Cavotec is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alimak Hek Group and Cavotec SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavotec SA and Alimak Hek 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 Alimak Hek Group are associated (or correlated) with Cavotec SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cavotec SA has no effect on the direction of Alimak Hek i.e., Alimak Hek and Cavotec SA go up and down completely randomly.

Pair Corralation between Alimak Hek and Cavotec SA

Assuming the 90 days trading horizon Alimak Hek Group is expected to generate 0.42 times more return on investment than Cavotec SA. However, Alimak Hek Group is 2.39 times less risky than Cavotec SA. It trades about 0.31 of its potential returns per unit of risk. Cavotec SA is currently generating about 0.05 per unit of risk. If you would invest  11,730  in Alimak Hek Group on April 22, 2025 and sell it today you would earn a total of  3,890  from holding Alimak Hek Group or generate 33.16% return on investment over 90 days.

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

Alimak Hek Group  vs.  Cavotec SA

Alimak Hek Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alimak Hek Group are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alimak Hek unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cavotec SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cavotec SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Cavotec SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alimak Hek and Cavotec SA

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

The idea behind Alimak Hek Group and Cavotec SA 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.