Correlation Between Addtech AB and AutoNation
Can any of the company-specific risk be diversified away by investing in both Addtech AB and AutoNation 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 AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and AutoNation, you can compare the effects of market volatilities on Addtech AB and AutoNation 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 AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and AutoNation.
Diversification Opportunities for Addtech AB and AutoNation
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addtech and AutoNation is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation 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 AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Addtech AB i.e., Addtech AB and AutoNation go up and down completely randomly.
Pair Corralation between Addtech AB and AutoNation
Assuming the 90 days trading horizon Addtech AB is expected to generate 1.35 times less return on investment than AutoNation. In addition to that, Addtech AB is 1.32 times more volatile than AutoNation. It trades about 0.18 of its total potential returns per unit of risk. AutoNation is currently generating about 0.32 per unit of volatility. If you would invest 16,440 in AutoNation on October 29, 2024 and sell it today you would earn a total of 1,260 from holding AutoNation or generate 7.66% 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. AutoNation
Performance |
| Timeline |
| Addtech AB |
| AutoNation |
Addtech AB and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and AutoNation
The main advantage of trading using opposite Addtech AB and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| Addtech AB vs. ALEFARM BREWING DK 05 | Addtech AB vs. Sumitomo Mitsui Construction | Addtech AB vs. Tencent Music Entertainment | Addtech AB vs. Australian Agricultural |
| AutoNation vs. PKSHA TECHNOLOGY INC | AutoNation vs. Agilent Technologies | AutoNation vs. FANDIFI TECHNOLOGY P | AutoNation vs. Firan Technology 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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