Correlation Between Karolinska Development and AddLife AB
Can any of the company-specific risk be diversified away by investing in both Karolinska Development and AddLife 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 Karolinska Development and AddLife AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karolinska Development AB and AddLife AB, you can compare the effects of market volatilities on Karolinska Development and AddLife 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 Karolinska Development with a short position of AddLife AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karolinska Development and AddLife AB.
Diversification Opportunities for Karolinska Development and AddLife AB
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Karolinska and AddLife is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Karolinska Development AB and AddLife AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AddLife AB and Karolinska Development 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 Karolinska Development AB are associated (or correlated) with AddLife AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AddLife AB has no effect on the direction of Karolinska Development i.e., Karolinska Development and AddLife AB go up and down completely randomly.
Pair Corralation between Karolinska Development and AddLife AB
Assuming the 90 days trading horizon Karolinska Development AB is expected to under-perform the AddLife AB. In addition to that, Karolinska Development is 1.17 times more volatile than AddLife AB. It trades about -0.07 of its total potential returns per unit of risk. AddLife AB is currently generating about 0.09 per unit of volatility. If you would invest 9,441 in AddLife AB on September 1, 2024 and sell it today you would earn a total of 3,869 from holding AddLife AB or generate 40.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Karolinska Development AB vs. AddLife AB
Performance |
| Timeline |
| Karolinska Development |
| AddLife AB |
Karolinska Development and AddLife AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karolinska Development and AddLife AB
The main advantage of trading using opposite Karolinska Development and AddLife AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karolinska Development position performs unexpectedly, AddLife 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 AddLife AB will offset losses from the drop in AddLife AB's long position.| Karolinska Development vs. Oncopeptides AB | Karolinska Development vs. Cantargia AB | Karolinska Development vs. BioInvent International AB | Karolinska Development vs. Moberg Pharma AB |
| AddLife AB vs. Addtech AB | AddLife AB vs. Lifco AB | AddLife AB vs. Indutrade AB | AddLife AB vs. Lagercrantz Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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