Correlation Between Addnode Group and HMS Networks
Can any of the company-specific risk be diversified away by investing in both Addnode Group and HMS Networks 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 Addnode Group and HMS Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addnode Group AB and HMS Networks AB, you can compare the effects of market volatilities on Addnode Group and HMS Networks 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 Addnode Group with a short position of HMS Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addnode Group and HMS Networks.
Diversification Opportunities for Addnode Group and HMS Networks
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Addnode and HMS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Addnode Group AB and HMS Networks AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMS Networks AB and Addnode Group 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 Addnode Group AB are associated (or correlated) with HMS Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMS Networks AB has no effect on the direction of Addnode Group i.e., Addnode Group and HMS Networks go up and down completely randomly.
Pair Corralation between Addnode Group and HMS Networks
Assuming the 90 days trading horizon Addnode Group AB is expected to generate 1.07 times more return on investment than HMS Networks. However, Addnode Group is 1.07 times more volatile than HMS Networks AB. It trades about -0.01 of its potential returns per unit of risk. HMS Networks AB is currently generating about -0.02 per unit of risk. If you would invest 12,381 in Addnode Group AB on September 2, 2024 and sell it today you would lose (2,331) from holding Addnode Group AB or give up 18.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addnode Group AB vs. HMS Networks AB
Performance |
| Timeline |
| Addnode Group AB |
| HMS Networks AB |
Addnode Group and HMS Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addnode Group and HMS Networks
The main advantage of trading using opposite Addnode Group and HMS Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addnode Group position performs unexpectedly, HMS Networks 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 HMS Networks will offset losses from the drop in HMS Networks' long position.| Addnode Group vs. Lagercrantz Group AB | Addnode Group vs. Addtech AB | Addnode Group vs. Vitec Software Group | Addnode Group vs. AddLife AB |
| HMS Networks vs. Vitec Software Group | HMS Networks vs. Troax Group AB | HMS Networks vs. Sectra AB | HMS Networks vs. Addnode Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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