Correlation Between MilDef Group and ADDvise Group
Can any of the company-specific risk be diversified away by investing in both MilDef Group and ADDvise Group 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 MilDef Group and ADDvise Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MilDef Group AB and ADDvise Group AB, you can compare the effects of market volatilities on MilDef Group and ADDvise Group 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 MilDef Group with a short position of ADDvise Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of MilDef Group and ADDvise Group.
Diversification Opportunities for MilDef Group and ADDvise Group
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MilDef and ADDvise is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding MilDef Group AB and ADDvise Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADDvise Group AB and MilDef Group 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 MilDef Group AB are associated (or correlated) with ADDvise Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADDvise Group AB has no effect on the direction of MilDef Group i.e., MilDef Group and ADDvise Group go up and down completely randomly.
Pair Corralation between MilDef Group and ADDvise Group
Assuming the 90 days trading horizon MilDef Group AB is expected to generate 0.6 times more return on investment than ADDvise Group. However, MilDef Group AB is 1.67 times less risky than ADDvise Group. It trades about 0.44 of its potential returns per unit of risk. ADDvise Group AB is currently generating about -0.14 per unit of risk. If you would invest 9,070 in MilDef Group AB on September 1, 2024 and sell it today you would earn a total of 2,730 from holding MilDef Group AB or generate 30.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
MilDef Group AB vs. ADDvise Group AB
Performance |
| Timeline |
| MilDef Group AB |
| ADDvise Group AB |
MilDef Group and ADDvise Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MilDef Group and ADDvise Group
The main advantage of trading using opposite MilDef Group and ADDvise Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MilDef Group position performs unexpectedly, ADDvise Group 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 ADDvise Group will offset losses from the drop in ADDvise Group's long position.The idea behind MilDef Group AB and ADDvise Group AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ADDvise Group vs. ADDvise Group B | ADDvise Group vs. Hanza AB | ADDvise Group vs. Awardit AB | ADDvise Group vs. Doxa 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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