Correlation Between Addtech AB and IAR Systems
Can any of the company-specific risk be diversified away by investing in both Addtech AB and IAR Systems 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 IAR Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and IAR Systems Group, you can compare the effects of market volatilities on Addtech AB and IAR Systems 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 IAR Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and IAR Systems.
Diversification Opportunities for Addtech AB and IAR Systems
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addtech and IAR is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and IAR Systems Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAR Systems Group 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 IAR Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAR Systems Group has no effect on the direction of Addtech AB i.e., Addtech AB and IAR Systems go up and down completely randomly.
Pair Corralation between Addtech AB and IAR Systems
Assuming the 90 days trading horizon Addtech AB is expected to generate 0.91 times more return on investment than IAR Systems. However, Addtech AB is 1.09 times less risky than IAR Systems. It trades about 0.09 of its potential returns per unit of risk. IAR Systems Group is currently generating about 0.04 per unit of risk. If you would invest 19,659 in Addtech AB on August 24, 2024 and sell it today you would earn a total of 9,381 from holding Addtech AB or generate 47.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addtech AB vs. IAR Systems Group
Performance |
| Timeline |
| Addtech AB |
| IAR Systems Group |
Addtech AB and IAR Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and IAR Systems
The main advantage of trading using opposite Addtech AB and IAR Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, IAR Systems 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 IAR Systems will offset losses from the drop in IAR Systems' long position.| Addtech AB vs. Indutrade AB | Addtech AB vs. Lifco AB | Addtech AB vs. Lagercrantz Group AB | Addtech AB vs. AddLife AB |
| IAR Systems vs. Lifco AB | IAR Systems vs. Lagercrantz Group AB | IAR Systems vs. Addtech AB | IAR Systems vs. Instalco Intressenter 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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