Correlation Between Addtech and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Addtech and Summit Materials 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 Addtech and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech and Summit Materials Cl, you can compare the effects of market volatilities on Addtech and Summit Materials 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 Addtech with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech and Summit Materials.
Diversification Opportunities for Addtech and Summit Materials
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Addtech and Summit is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Addtech and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Addtech 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 Addtech are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Addtech i.e., Addtech and Summit Materials go up and down completely randomly.
Pair Corralation between Addtech and Summit Materials
Assuming the 90 days trading horizon Addtech is expected to generate 6.47 times more return on investment than Summit Materials. However, Addtech is 6.47 times more volatile than Summit Materials Cl. It trades about 0.02 of its potential returns per unit of risk. Summit Materials Cl is currently generating about -0.11 per unit of risk. If you would invest 30,120 in Addtech on September 24, 2024 and sell it today you would earn a total of 90.00 from holding Addtech or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addtech vs. Summit Materials Cl
Performance |
| Timeline |
| Addtech |
| Summit Materials |
Addtech and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech and Summit Materials
The main advantage of trading using opposite Addtech and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Addtech vs. Uniper SE | Addtech vs. Mulberry Group PLC | Addtech vs. London Security Plc | Addtech vs. Triad Group PLC |
| Summit Materials vs. Addtech | Summit Materials vs. Ashtead Technology Holdings | Summit Materials vs. British American Tobacco | Summit Materials vs. Universal Display Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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