Correlation Between CellaVision and HMS Networks

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

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

Diversification Opportunities for CellaVision and HMS Networks

0.64

Correlation Coefficient

CellaVision  HMS Networks

Poor diversification

The 3 months correlation between CellaVision and HMS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CellaVision AB and HMS Networks AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMS Networks AB and CellaVision 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 CellaVision AB are associated (or correlated) with HMS Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMS Networks AB has no effect on the direction of CellaVision i.e., CellaVision and HMS Networks go up and down completely randomly.

Pair Corralation between CellaVision and HMS Networks

Assuming the 90 days trading horizon CellaVision AB is expected to generate 1.88 times more return on investment than HMS Networks. However, CellaVision is 1.88 times more volatile than HMS Networks AB. It trades about 0.06 of its potential returns per unit of risk. HMS Networks AB is currently generating about -0.02 per unit of risk. If you would invest  16,293  in CellaVision AB on April 24, 2025 and sell it today you would earn a total of  1,487  from holding CellaVision AB or generate 9.13% return on investment over 90 days.

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

CellaVision AB  vs.  HMS Networks AB

CellaVision AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CellaVision AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CellaVision may actually be approaching a critical reversion point that can send shares even higher in August 2025.

HMS Networks AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days HMS Networks AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HMS Networks is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CellaVision and HMS Networks

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

The idea behind CellaVision AB and HMS Networks 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..