Correlation Between Addtech AB and Indutrade
Can any of the company-specific risk be diversified away by investing in both Addtech AB and Indutrade 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 Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and Indutrade AB, you can compare the effects of market volatilities on Addtech AB and Indutrade 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 Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and Indutrade.
Diversification Opportunities for Addtech AB and Indutrade
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Addtech and Indutrade is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB 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 Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Addtech AB i.e., Addtech AB and Indutrade go up and down completely randomly.
Pair Corralation between Addtech AB and Indutrade
Assuming the 90 days trading horizon Addtech AB is expected to generate 2.25 times less return on investment than Indutrade. But when comparing it to its historical volatility, Addtech AB is 1.01 times less risky than Indutrade. It trades about 0.12 of its potential returns per unit of risk. Indutrade AB is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,380 in Indutrade AB on October 24, 2024 and sell it today you would earn a total of 186.00 from holding Indutrade AB or generate 7.82% 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. Indutrade AB
Performance |
| Timeline |
| Addtech AB |
| Indutrade AB |
Addtech AB and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and Indutrade
The main advantage of trading using opposite Addtech AB and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| Addtech AB vs. RATIONAL Aktiengesellschaft | Addtech AB vs. WW Grainger | Addtech AB vs. Fastenal Company | Addtech AB vs. Watsco Inc |
| Indutrade vs. GungHo Online Entertainment | Indutrade vs. Madison Square Garden | Indutrade vs. COLUMBIA SPORTSWEAR | Indutrade vs. Nexstar Media 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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