Correlation Between Bravida Holding and Addtech AB
Can any of the company-specific risk be diversified away by investing in both Bravida Holding and Addtech AB 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 Bravida Holding and Addtech AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bravida Holding AB and Addtech AB, you can compare the effects of market volatilities on Bravida Holding and Addtech AB 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 Bravida Holding with a short position of Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bravida Holding and Addtech AB.
Diversification Opportunities for Bravida Holding and Addtech AB
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bravida and Addtech is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bravida Holding AB and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Bravida Holding 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 Bravida Holding AB are associated (or correlated) with Addtech AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech AB has no effect on the direction of Bravida Holding i.e., Bravida Holding and Addtech AB go up and down completely randomly.
Pair Corralation between Bravida Holding and Addtech AB
Assuming the 90 days trading horizon Bravida Holding is expected to generate 5.83 times less return on investment than Addtech AB. But when comparing it to its historical volatility, Bravida Holding AB is 1.03 times less risky than Addtech AB. It trades about 0.01 of its potential returns per unit of risk. Addtech AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 21,949 in Addtech AB on August 25, 2024 and sell it today you would earn a total of 7,891 from holding Addtech AB or generate 35.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bravida Holding AB vs. Addtech AB
Performance |
| Timeline |
| Bravida Holding AB |
| Addtech AB |
Bravida Holding and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bravida Holding and Addtech AB
The main advantage of trading using opposite Bravida Holding and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bravida Holding position performs unexpectedly, Addtech AB 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 Addtech AB will offset losses from the drop in Addtech AB's long position.| Bravida Holding vs. Addtech AB | Bravida Holding vs. Teqnion AB | Bravida Holding vs. Vitec Software Group | Bravida Holding vs. Lagercrantz Group AB |
| Addtech AB vs. Indutrade AB | Addtech AB vs. Lifco AB | Addtech AB vs. Lagercrantz Group AB | Addtech AB vs. AddLife 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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