Correlation Between Fastenal and Addtech AB
Can any of the company-specific risk be diversified away by investing in both Fastenal 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 Fastenal and Addtech AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fastenal Company and Addtech AB, you can compare the effects of market volatilities on Fastenal 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 Fastenal with a short position of Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastenal and Addtech AB.
Diversification Opportunities for Fastenal and Addtech AB
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fastenal and Addtech is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Fastenal 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 Fastenal Company 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 Fastenal i.e., Fastenal and Addtech AB go up and down completely randomly.
Pair Corralation between Fastenal and Addtech AB
Assuming the 90 days horizon Fastenal is expected to generate 1.83 times less return on investment than Addtech AB. In addition to that, Fastenal is 1.05 times more volatile than Addtech AB. It trades about 0.07 of its total potential returns per unit of risk. Addtech AB is currently generating about 0.13 per unit of volatility. If you would invest 2,620 in Addtech AB on November 3, 2024 and sell it today you would earn a total of 138.00 from holding Addtech AB or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fastenal Company vs. Addtech AB
Performance |
| Timeline |
| Fastenal |
| Addtech AB |
Fastenal and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fastenal and Addtech AB
The main advantage of trading using opposite Fastenal and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastenal 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.| Fastenal vs. Spirent Communications plc | Fastenal vs. Sekisui Chemical Co | Fastenal vs. Casio Computer CoLtd | Fastenal vs. KINGBOARD CHEMICAL |
| Addtech AB vs. Highlight Communications AG | Addtech AB vs. Nanjing Panda Electronics | Addtech AB vs. Singapore Telecommunications Limited | Addtech AB vs. Methode Electronics |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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