Correlation Between Addtech AB and Grand Canyon
Can any of the company-specific risk be diversified away by investing in both Addtech AB and Grand Canyon 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 Grand Canyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and Grand Canyon Education, you can compare the effects of market volatilities on Addtech AB and Grand Canyon 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 Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and Grand Canyon.
Diversification Opportunities for Addtech AB and Grand Canyon
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Addtech and Grand is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education 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 Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of Addtech AB i.e., Addtech AB and Grand Canyon go up and down completely randomly.
Pair Corralation between Addtech AB and Grand Canyon
Assuming the 90 days trading horizon Addtech AB is expected to generate 1.41 times more return on investment than Grand Canyon. However, Addtech AB is 1.41 times more volatile than Grand Canyon Education. It trades about 0.08 of its potential returns per unit of risk. Grand Canyon Education is currently generating about 0.06 per unit of risk. If you would invest 1,113 in Addtech AB on October 14, 2024 and sell it today you would earn a total of 1,447 from holding Addtech AB or generate 130.01% 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. Grand Canyon Education
Performance |
| Timeline |
| Addtech AB |
| Grand Canyon Education |
Addtech AB and Grand Canyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and Grand Canyon
The main advantage of trading using opposite Addtech AB and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, Grand Canyon 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 Grand Canyon will offset losses from the drop in Grand Canyon's long position.| Addtech AB vs. International Game Technology | Addtech AB vs. Scientific Games | Addtech AB vs. Media and Games | Addtech AB vs. GameStop Corp |
| Grand Canyon vs. Citic Telecom International | Grand Canyon vs. ACCSYS TECHPLC EO | Grand Canyon vs. Kingdee International Software | Grand Canyon vs. Addtech 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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