Correlation Between Alcon AG and Haemonetics

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

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

Diversification Opportunities for Alcon AG and Haemonetics

-0.09

Correlation Coefficient

Alcon AG  Haemonetics

Good diversification

The 3 months correlation between Alcon and Haemonetics is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Alcon AG and Haemonetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haemonetics and Alcon AG 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 Alcon AG are associated (or correlated) with Haemonetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haemonetics has no effect on the direction of Alcon AG i.e., Alcon AG and Haemonetics go up and down completely randomly.

Pair Corralation between Alcon AG and Haemonetics

Considering the 90-day investment horizon Alcon AG is expected to generate 1.06 times less return on investment than Haemonetics. In addition to that, Alcon AG is 1.49 times more volatile than Haemonetics. It trades about 0.24 of its total potential returns per unit of risk. Haemonetics is currently generating about 0.38 per unit of volatility. If you would invest  8,417  in Haemonetics on February 16, 2024 and sell it today you would earn a total of  1,232  from holding Haemonetics or generate 14.64% return on investment over 90 days.

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

Alcon AG  vs.  Haemonetics

Alcon AG

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alcon AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Alcon AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

Haemonetics

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Haemonetics are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Haemonetics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alcon AG and Haemonetics

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

The idea behind Alcon AG and Haemonetics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.