Correlation Between Investment and Addtech AB
Can any of the company-specific risk be diversified away by investing in both Investment 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 Investment and Addtech AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment AB Latour and Addtech AB, you can compare the effects of market volatilities on Investment 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 Investment with a short position of Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Addtech AB.
Diversification Opportunities for Investment and Addtech AB
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Investment and Addtech is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Latour and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Investment 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 Investment AB Latour 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 Investment i.e., Investment and Addtech AB go up and down completely randomly.
Pair Corralation between Investment and Addtech AB
Assuming the 90 days trading horizon Investment AB Latour is expected to under-perform the Addtech AB. But the stock apears to be less risky and, when comparing its historical volatility, Investment AB Latour is 1.13 times less risky than Addtech AB. The stock trades about -0.06 of its potential returns per unit of risk. The Addtech AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 30,120 in Addtech AB on October 26, 2024 and sell it today you would earn a total of 1,600 from holding Addtech AB or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment AB Latour vs. Addtech AB
Performance |
| Timeline |
| Investment AB Latour |
| Addtech AB |
Investment and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Addtech AB
The main advantage of trading using opposite Investment and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment 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.| Investment vs. Kinnevik Investment AB | Investment vs. Investor AB ser | Investment vs. L E Lundbergfretagen | Investment vs. Industrivarden AB ser |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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