Correlation Between Addtech AB and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both Addtech AB and Lamar Advertising 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 Addtech AB and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and Lamar Advertising, you can compare the effects of market volatilities on Addtech AB and Lamar Advertising 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 Addtech AB with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and Lamar Advertising.
Diversification Opportunities for Addtech AB and Lamar Advertising
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Addtech and Lamar is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and Addtech 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 Addtech AB are associated (or correlated) with Lamar Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamar Advertising has no effect on the direction of Addtech AB i.e., Addtech AB and Lamar Advertising go up and down completely randomly.
Pair Corralation between Addtech AB and Lamar Advertising
Assuming the 90 days trading horizon Addtech AB is expected to generate 1.39 times more return on investment than Lamar Advertising. However, Addtech AB is 1.39 times more volatile than Lamar Advertising. It trades about 0.14 of its potential returns per unit of risk. Lamar Advertising is currently generating about 0.09 per unit of risk. If you would invest 2,624 in Addtech AB on October 25, 2024 and sell it today you would earn a total of 106.00 from holding Addtech AB or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Addtech AB vs. Lamar Advertising
Performance |
| Timeline |
| Addtech AB |
| Lamar Advertising |
Addtech AB and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and Lamar Advertising
The main advantage of trading using opposite Addtech AB and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, Lamar Advertising 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 Lamar Advertising will offset losses from the drop in Lamar Advertising's long position.| Addtech AB vs. Fastenal Company | Addtech AB vs. Indutrade AB | Addtech AB vs. Superior Plus Corp | Addtech AB vs. Origin Agritech |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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