Correlation Between Addtech AB and Dometic Group
Can any of the company-specific risk be diversified away by investing in both Addtech AB and Dometic 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 Dometic 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 Dometic Group AB, you can compare the effects of market volatilities on Addtech AB and Dometic 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 Dometic Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and Dometic Group.
Diversification Opportunities for Addtech AB and Dometic Group
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Addtech and Dometic is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and Dometic Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dometic 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 Dometic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dometic Group AB has no effect on the direction of Addtech AB i.e., Addtech AB and Dometic Group go up and down completely randomly.
Pair Corralation between Addtech AB and Dometic Group
Assuming the 90 days trading horizon Addtech AB is expected to generate 1.14 times more return on investment than Dometic Group. However, Addtech AB is 1.14 times more volatile than Dometic Group AB. It trades about 0.08 of its potential returns per unit of risk. Dometic Group AB is currently generating about -0.1 per unit of risk. If you would invest 24,587 in Addtech AB on August 29, 2024 and sell it today you would earn a total of 5,413 from holding Addtech AB or generate 22.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addtech AB vs. Dometic Group AB
Performance |
| Timeline |
| Addtech AB |
| Dometic Group AB |
Addtech AB and Dometic Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and Dometic Group
The main advantage of trading using opposite Addtech AB and Dometic Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, Dometic 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 Dometic Group will offset losses from the drop in Dometic 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 |
| Dometic Group vs. Thule Group AB | Dometic Group vs. Husqvarna AB | Dometic Group vs. Trelleborg AB | Dometic Group vs. Essity 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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