Correlation Between Addnode Group and Proact IT
Can any of the company-specific risk be diversified away by investing in both Addnode Group and Proact IT 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 Proact IT 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 Proact IT Group, you can compare the effects of market volatilities on Addnode Group and Proact IT 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 Proact IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addnode Group and Proact IT.
Diversification Opportunities for Addnode Group and Proact IT
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addnode and Proact is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Addnode Group AB and Proact IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proact IT Group 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 Proact IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proact IT Group has no effect on the direction of Addnode Group i.e., Addnode Group and Proact IT go up and down completely randomly.
Pair Corralation between Addnode Group and Proact IT
Assuming the 90 days trading horizon Addnode Group AB is expected to under-perform the Proact IT. But the stock apears to be less risky and, when comparing its historical volatility, Addnode Group AB is 1.02 times less risky than Proact IT. The stock trades about -0.17 of its potential returns per unit of risk. The Proact IT Group is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 13,640 in Proact IT Group on September 3, 2024 and sell it today you would lose (400.00) from holding Proact IT Group or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addnode Group AB vs. Proact IT Group
Performance |
| Timeline |
| Addnode Group AB |
| Proact IT Group |
Addnode Group and Proact IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addnode Group and Proact IT
The main advantage of trading using opposite Addnode Group and Proact IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addnode Group position performs unexpectedly, Proact IT 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 Proact IT will offset losses from the drop in Proact IT's long position.| Addnode Group vs. Lagercrantz Group AB | Addnode Group vs. Addtech AB | Addnode Group vs. Vitec Software Group | Addnode 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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