Correlation Between Advenica and ADDvise Group
Can any of the company-specific risk be diversified away by investing in both Advenica and ADDvise 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 Advenica and ADDvise Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advenica AB and ADDvise Group B, you can compare the effects of market volatilities on Advenica and ADDvise 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 Advenica with a short position of ADDvise Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advenica and ADDvise Group.
Diversification Opportunities for Advenica and ADDvise Group
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advenica and ADDvise is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Advenica AB and ADDvise Group B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADDvise Group B and Advenica 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 Advenica AB are associated (or correlated) with ADDvise Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADDvise Group B has no effect on the direction of Advenica i.e., Advenica and ADDvise Group go up and down completely randomly.
Pair Corralation between Advenica and ADDvise Group
Assuming the 90 days trading horizon Advenica AB is expected to generate 1.09 times more return on investment than ADDvise Group. However, Advenica is 1.09 times more volatile than ADDvise Group B. It trades about 0.02 of its potential returns per unit of risk. ADDvise Group B is currently generating about -0.08 per unit of risk. If you would invest 1,020 in Advenica AB on August 29, 2024 and sell it today you would lose (38.00) from holding Advenica AB or give up 3.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advenica AB vs. ADDvise Group B
Performance |
| Timeline |
| Advenica AB |
| ADDvise Group B |
Advenica and ADDvise Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advenica and ADDvise Group
The main advantage of trading using opposite Advenica and ADDvise Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advenica position performs unexpectedly, ADDvise 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 ADDvise Group will offset losses from the drop in ADDvise Group's long position.| Advenica vs. SECITS Holding AB | Advenica vs. Zaplox AB | Advenica vs. XMReality AB | Advenica vs. Nicoccino Holding 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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