Correlation Between Addnode Group and Softronic
Can any of the company-specific risk be diversified away by investing in both Addnode Group and Softronic 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 Softronic 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 Softronic AB, you can compare the effects of market volatilities on Addnode Group and Softronic 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 Softronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addnode Group and Softronic.
Diversification Opportunities for Addnode Group and Softronic
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Addnode and Softronic is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Addnode Group AB and Softronic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softronic 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 Softronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softronic AB has no effect on the direction of Addnode Group i.e., Addnode Group and Softronic go up and down completely randomly.
Pair Corralation between Addnode Group and Softronic
Assuming the 90 days trading horizon Addnode Group AB is expected to generate 2.82 times more return on investment than Softronic. However, Addnode Group is 2.82 times more volatile than Softronic AB. It trades about 0.22 of its potential returns per unit of risk. Softronic AB is currently generating about -0.11 per unit of risk. If you would invest 10,080 in Addnode Group AB on November 8, 2024 and sell it today you would earn a total of 1,880 from holding Addnode Group AB or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addnode Group AB vs. Softronic AB
Performance |
| Timeline |
| Addnode Group AB |
| Softronic AB |
Addnode Group and Softronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addnode Group and Softronic
The main advantage of trading using opposite Addnode Group and Softronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addnode Group position performs unexpectedly, Softronic 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 Softronic will offset losses from the drop in Softronic'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 |
| Softronic vs. eWork Group AB | Softronic vs. Novotek AB | Softronic vs. Prevas AB | Softronic vs. Proact IT Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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