Correlation Between Addtech AB and Air Lease
Can any of the company-specific risk be diversified away by investing in both Addtech AB and Air Lease 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 Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and Air Lease, you can compare the effects of market volatilities on Addtech AB and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and Air Lease.
Diversification Opportunities for Addtech AB and Air Lease
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Addtech and Air is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Addtech AB i.e., Addtech AB and Air Lease go up and down completely randomly.
Pair Corralation between Addtech AB and Air Lease
Assuming the 90 days trading horizon Addtech AB is expected to generate 1.34 times more return on investment than Air Lease. However, Addtech AB is 1.34 times more volatile than Air Lease. It trades about 0.08 of its potential returns per unit of risk. Air Lease is currently generating about 0.02 per unit of risk. If you would invest 1,250 in Addtech AB on October 28, 2024 and sell it today you would earn a total of 1,514 from holding Addtech AB or generate 121.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addtech AB vs. Air Lease
Performance |
| Timeline |
| Addtech AB |
| Air Lease |
Addtech AB and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and Air Lease
The main advantage of trading using opposite Addtech AB and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Addtech AB vs. Indutrade AB | Addtech AB vs. Superior Plus Corp | Addtech AB vs. Origin Agritech | Addtech AB vs. Identiv |
| Air Lease vs. United Rentals | Air Lease vs. WillScot Mobile Mini | Air Lease vs. Avis Budget Group | Air Lease vs. ALD SA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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