Correlation Between ITALIAN WINE and Addtech AB
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE 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 ITALIAN WINE and Addtech AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and Addtech AB, you can compare the effects of market volatilities on ITALIAN WINE 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 ITALIAN WINE with a short position of Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and Addtech AB.
Diversification Opportunities for ITALIAN WINE and Addtech AB
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ITALIAN and Addtech is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and Addtech AB go up and down completely randomly.
Pair Corralation between ITALIAN WINE and Addtech AB
Assuming the 90 days horizon ITALIAN WINE is expected to generate 4.58 times less return on investment than Addtech AB. But when comparing it to its historical volatility, ITALIAN WINE BRANDS is 1.25 times less risky than Addtech AB. It trades about 0.03 of its potential returns per unit of risk. Addtech AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,248 in Addtech AB on September 12, 2024 and sell it today you would earn a total of 1,410 from holding Addtech AB or generate 112.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. Addtech AB
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| Addtech AB |
ITALIAN WINE and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and Addtech AB
The main advantage of trading using opposite ITALIAN WINE and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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.| ITALIAN WINE vs. Fast Retailing Co | ITALIAN WINE vs. United Natural Foods | ITALIAN WINE vs. AUSTEVOLL SEAFOOD | ITALIAN WINE vs. ASSOC BR FOODS |
| Addtech AB vs. Datadog | Addtech AB vs. TERADATA | Addtech AB vs. ITALIAN WINE BRANDS | Addtech AB vs. Zoom Video Communications |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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