Correlation Between AddLife AB and Nimbus Group
Can any of the company-specific risk be diversified away by investing in both AddLife AB and Nimbus 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 Nimbus 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 Nimbus Group AB, you can compare the effects of market volatilities on AddLife AB and Nimbus 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 Nimbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AddLife AB and Nimbus Group.
Diversification Opportunities for AddLife AB and Nimbus Group
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AddLife and Nimbus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AddLife AB and Nimbus Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nimbus 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 Nimbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nimbus Group AB has no effect on the direction of AddLife AB i.e., AddLife AB and Nimbus Group go up and down completely randomly.
Pair Corralation between AddLife AB and Nimbus Group
Assuming the 90 days trading horizon AddLife AB is expected to generate 1.07 times more return on investment than Nimbus Group. However, AddLife AB is 1.07 times more volatile than Nimbus Group AB. It trades about 0.02 of its potential returns per unit of risk. Nimbus Group AB is currently generating about -0.03 per unit of risk. If you would invest 11,666 in AddLife AB on September 4, 2024 and sell it today you would earn a total of 1,634 from holding AddLife AB or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AddLife AB vs. Nimbus Group AB
Performance |
| Timeline |
| AddLife AB |
| Nimbus Group AB |
AddLife AB and Nimbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AddLife AB and Nimbus Group
The main advantage of trading using opposite AddLife AB and Nimbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AddLife AB position performs unexpectedly, Nimbus 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 Nimbus Group will offset losses from the drop in Nimbus 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 |
| Nimbus Group vs. Truecaller AB | Nimbus Group vs. Dedicare AB | Nimbus Group vs. RVRC Holding AB | Nimbus Group vs. AddLife 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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