Correlation Between Momentum Group and Addtech AB
Can any of the company-specific risk be diversified away by investing in both Momentum Group 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 Momentum Group and Addtech AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Momentum Group AB and Addtech AB, you can compare the effects of market volatilities on Momentum Group 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 Momentum Group with a short position of Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Momentum Group and Addtech AB.
Diversification Opportunities for Momentum Group and Addtech AB
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Momentum and Addtech is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Momentum Group AB and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Momentum 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 Momentum Group AB 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 Momentum Group i.e., Momentum Group and Addtech AB go up and down completely randomly.
Pair Corralation between Momentum Group and Addtech AB
Assuming the 90 days trading horizon Momentum Group AB is expected to generate 1.47 times more return on investment than Addtech AB. However, Momentum Group is 1.47 times more volatile than Addtech AB. It trades about 0.09 of its potential returns per unit of risk. Addtech AB is currently generating about 0.08 per unit of risk. If you would invest 5,836 in Momentum Group AB on August 28, 2024 and sell it today you would earn a total of 11,144 from holding Momentum Group AB or generate 190.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Momentum Group AB vs. Addtech AB
Performance |
| Timeline |
| Momentum Group AB |
| Addtech AB |
Momentum Group and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Momentum Group and Addtech AB
The main advantage of trading using opposite Momentum Group and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentum Group 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.| Momentum Group vs. Indutrade AB | Momentum Group vs. Lifco AB | Momentum Group vs. Lagercrantz Group AB | Momentum Group vs. AddLife AB |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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