Correlation Between Keyence and Addtech AB
Can any of the company-specific risk be diversified away by investing in both Keyence 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 Keyence and Addtech AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyence and Addtech AB, you can compare the effects of market volatilities on Keyence 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 Keyence with a short position of Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyence and Addtech AB.
Diversification Opportunities for Keyence and Addtech AB
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Keyence and Addtech is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Keyence and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Keyence 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 Keyence 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 Keyence i.e., Keyence and Addtech AB go up and down completely randomly.
Pair Corralation between Keyence and Addtech AB
Assuming the 90 days horizon Keyence is expected to generate 1.0 times more return on investment than Addtech AB. However, Keyence is 1.0 times more volatile than Addtech AB. It trades about 0.22 of its potential returns per unit of risk. Addtech AB is currently generating about 0.12 per unit of risk. If you would invest 39,000 in Keyence on October 25, 2024 and sell it today you would earn a total of 2,510 from holding Keyence or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keyence vs. Addtech AB
Performance |
| Timeline |
| Keyence |
| Addtech AB |
Keyence and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyence and Addtech AB
The main advantage of trading using opposite Keyence and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyence 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.| Keyence vs. Insteel Industries | Keyence vs. BlueScope Steel Limited | Keyence vs. Boyd Gaming | Keyence vs. Nippon Steel |
| Addtech AB vs. Fastenal Company | Addtech AB vs. Indutrade AB | Addtech AB vs. Superior Plus Corp | Addtech AB vs. Origin Agritech |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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