Correlation Between Addtech AB and Keyence
Can any of the company-specific risk be diversified away by investing in both Addtech AB and Keyence 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 Keyence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and Keyence, you can compare the effects of market volatilities on Addtech AB and Keyence 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 Keyence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and Keyence.
Diversification Opportunities for Addtech AB and Keyence
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Addtech and Keyence is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence 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 Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of Addtech AB i.e., Addtech AB and Keyence go up and down completely randomly.
Pair Corralation between Addtech AB and Keyence
Assuming the 90 days trading horizon Addtech AB is expected to generate 1.42 times less return on investment than Keyence. But when comparing it to its historical volatility, Addtech AB is 2.15 times less risky than Keyence. It trades about 0.09 of its potential returns per unit of risk. Keyence is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 27,646 in Keyence on October 25, 2024 and sell it today you would earn a total of 13,864 from holding Keyence or generate 50.15% 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. Keyence
Performance |
| Timeline |
| Addtech AB |
| Keyence |
Addtech AB and Keyence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and Keyence
The main advantage of trading using opposite Addtech AB and Keyence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, Keyence 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 Keyence will offset losses from the drop in Keyence's long position.| Addtech AB vs. Fastenal Company | Addtech AB vs. Indutrade AB | Addtech AB vs. Superior Plus Corp | Addtech AB vs. Origin Agritech |
| Keyence vs. Insteel Industries | Keyence vs. BlueScope Steel Limited | Keyence vs. Boyd Gaming | Keyence vs. Nippon Steel |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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