Correlation Between HMS Networks and Alcadon Group

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

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

Diversification Opportunities for HMS Networks and Alcadon Group

-0.71

Correlation Coefficient

HMS Networks  Alcadon Group

Pay attention - limited upside

The 3 months correlation between HMS and Alcadon is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding HMS Networks AB and Alcadon Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcadon Group AB and HMS Networks 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 HMS Networks AB are associated (or correlated) with Alcadon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcadon Group AB has no effect on the direction of HMS Networks i.e., HMS Networks and Alcadon Group go up and down completely randomly.

Pair Corralation between HMS Networks and Alcadon Group

Assuming the 90 days trading horizon HMS Networks AB is expected to under-perform the Alcadon Group. But the stock apears to be less risky and, when comparing its historical volatility, HMS Networks AB is 1.53 times less risky than Alcadon Group. The stock trades about -0.01 of its potential returns per unit of risk. The Alcadon Group AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,040  in Alcadon Group AB on April 25, 2025 and sell it today you would earn a total of  260.00  from holding Alcadon Group AB or generate 12.75% return on investment over 90 days.

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

HMS Networks AB  vs.  Alcadon Group AB

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Alcadon Group AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alcadon Group AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alcadon Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HMS Networks and Alcadon Group

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

The idea behind HMS Networks AB and Alcadon Group 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.