Correlation Between Addtech AB and Inwido AB
Can any of the company-specific risk be diversified away by investing in both Addtech AB and Inwido AB 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 Inwido AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and Inwido AB, you can compare the effects of market volatilities on Addtech AB and Inwido AB 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 Inwido AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and Inwido AB.
Diversification Opportunities for Addtech AB and Inwido AB
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Addtech and Inwido is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and Inwido AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inwido 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 Inwido AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inwido AB has no effect on the direction of Addtech AB i.e., Addtech AB and Inwido AB go up and down completely randomly.
Pair Corralation between Addtech AB and Inwido AB
Assuming the 90 days trading horizon Addtech AB is expected to generate 1.57 times more return on investment than Inwido AB. However, Addtech AB is 1.57 times more volatile than Inwido AB. It trades about 0.15 of its potential returns per unit of risk. Inwido AB is currently generating about -0.1 per unit of risk. If you would invest 27,980 in Addtech AB on August 25, 2024 and sell it today you would earn a total of 1,860 from holding Addtech AB or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Addtech AB vs. Inwido AB
Performance |
| Timeline |
| Addtech AB |
| Inwido AB |
Addtech AB and Inwido AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and Inwido AB
The main advantage of trading using opposite Addtech AB and Inwido AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, Inwido AB 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 Inwido AB will offset losses from the drop in Inwido AB's long position.| Addtech AB vs. Indutrade AB | Addtech AB vs. Lifco AB | Addtech AB vs. Lagercrantz Group AB | Addtech AB vs. AddLife AB |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |