Correlation Between AddLife AB and Absolent Group
Can any of the company-specific risk be diversified away by investing in both AddLife 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 AddLife 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 AddLife AB and Absolent Group AB, you can compare the effects of market volatilities on AddLife 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 AddLife AB with a short position of Absolent Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AddLife AB and Absolent Group.
Diversification Opportunities for AddLife AB and Absolent Group
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AddLife and Absolent is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding AddLife 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 AddLife 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 AddLife 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 AddLife AB i.e., AddLife AB and Absolent Group go up and down completely randomly.
Pair Corralation between AddLife AB and Absolent Group
Assuming the 90 days trading horizon AddLife AB is expected to generate 1.52 times more return on investment than Absolent Group. However, AddLife AB is 1.52 times more volatile than Absolent Group AB. It trades about 0.01 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 13,637 in AddLife AB on August 31, 2024 and sell it today you would lose (507.00) from holding AddLife AB or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AddLife AB vs. Absolent Group AB
Performance |
| Timeline |
| AddLife AB |
| Absolent Group AB |
AddLife AB and Absolent Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AddLife AB and Absolent Group
The main advantage of trading using opposite AddLife AB and Absolent Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AddLife 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.| AddLife AB vs. Addtech AB | AddLife AB vs. Lifco AB | AddLife AB vs. Indutrade AB | AddLife AB vs. Lagercrantz Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |