Correlation Between Addtech AB and ITOCHU
Can any of the company-specific risk be diversified away by investing in both Addtech AB and ITOCHU 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 ITOCHU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and ITOCHU, you can compare the effects of market volatilities on Addtech AB and ITOCHU 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 ITOCHU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and ITOCHU.
Diversification Opportunities for Addtech AB and ITOCHU
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addtech and ITOCHU is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU 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 ITOCHU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITOCHU has no effect on the direction of Addtech AB i.e., Addtech AB and ITOCHU go up and down completely randomly.
Pair Corralation between Addtech AB and ITOCHU
Assuming the 90 days trading horizon Addtech AB is expected to generate 1.16 times more return on investment than ITOCHU. However, Addtech AB is 1.16 times more volatile than ITOCHU. It trades about 0.12 of its potential returns per unit of risk. ITOCHU is currently generating about -0.23 per unit of risk. If you would invest 2,618 in Addtech AB on October 24, 2024 and sell it today you would earn a total of 86.00 from holding Addtech AB or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addtech AB vs. ITOCHU
Performance |
| Timeline |
| Addtech AB |
| ITOCHU |
Addtech AB and ITOCHU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and ITOCHU
The main advantage of trading using opposite Addtech AB and ITOCHU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, ITOCHU 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 ITOCHU will offset losses from the drop in ITOCHU's long position.| Addtech AB vs. RATIONAL Aktiengesellschaft | Addtech AB vs. WW Grainger | Addtech AB vs. Fastenal Company | Addtech AB vs. Watsco Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |