Correlation Between Addtech AB and Absolent Group
Can any of the company-specific risk be diversified away by investing in both Addtech AB and Absolent 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 Addtech AB and Absolent Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and Absolent Group AB, you can compare the effects of market volatilities on Addtech AB and Absolent 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 Addtech AB with a short position of Absolent Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and Absolent Group.
Diversification Opportunities for Addtech AB and Absolent Group
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Addtech and Absolent is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and Absolent Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolent Group AB and Addtech AB 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 AB are associated (or correlated) with Absolent Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolent Group AB has no effect on the direction of Addtech AB i.e., Addtech AB and Absolent Group go up and down completely randomly.
Pair Corralation between Addtech AB and Absolent Group
Assuming the 90 days trading horizon Addtech AB is expected to generate 1.08 times more return on investment than Absolent Group. However, Addtech AB is 1.08 times more volatile than Absolent Group AB. It trades about 0.05 of its potential returns per unit of risk. Absolent Group AB is currently generating about -0.08 per unit of risk. If you would invest 22,727 in Addtech AB on August 31, 2024 and sell it today you would earn a total of 7,273 from holding Addtech AB or generate 32.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addtech AB vs. Absolent Group AB
Performance |
| Timeline |
| Addtech AB |
| Absolent Group AB |
Addtech AB and Absolent Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and Absolent Group
The main advantage of trading using opposite Addtech AB and Absolent Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, Absolent 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 Absolent Group will offset losses from the drop in Absolent Group's long position.| Addtech AB vs. Indutrade AB | Addtech AB vs. Lifco AB | Addtech AB vs. Lagercrantz Group AB | Addtech AB vs. AddLife AB |
| Absolent Group vs. AQ Group AB | Absolent Group vs. Troax Group AB | Absolent Group vs. Bufab Holding AB | Absolent Group vs. Beijer Ref AB |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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