Correlation Between Novotek AB and Addnode Group
Can any of the company-specific risk be diversified away by investing in both Novotek AB and Addnode 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 Novotek AB and Addnode Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novotek AB and Addnode Group AB, you can compare the effects of market volatilities on Novotek AB and Addnode 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 Novotek AB with a short position of Addnode Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novotek AB and Addnode Group.
Diversification Opportunities for Novotek AB and Addnode Group
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Novotek and Addnode is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Novotek AB and Addnode Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addnode Group AB and Novotek AB 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 Novotek AB are associated (or correlated) with Addnode Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addnode Group AB has no effect on the direction of Novotek AB i.e., Novotek AB and Addnode Group go up and down completely randomly.
Pair Corralation between Novotek AB and Addnode Group
Assuming the 90 days trading horizon Novotek AB is expected to under-perform the Addnode Group. But the stock apears to be less risky and, when comparing its historical volatility, Novotek AB is 2.27 times less risky than Addnode Group. The stock trades about -0.2 of its potential returns per unit of risk. The Addnode Group AB is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 10,080 in Addnode Group AB on November 8, 2024 and sell it today you would earn a total of 1,880 from holding Addnode Group AB or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novotek AB vs. Addnode Group AB
Performance |
| Timeline |
| Novotek AB |
| Addnode Group AB |
Novotek AB and Addnode Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novotek AB and Addnode Group
The main advantage of trading using opposite Novotek AB and Addnode Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novotek AB position performs unexpectedly, Addnode 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 Addnode Group will offset losses from the drop in Addnode Group's long position.| Novotek AB vs. Softronic AB | Novotek AB vs. Prevas AB | Novotek AB vs. FormPipe Software AB | Novotek AB vs. NOTE AB |
| Addnode Group vs. Lagercrantz Group AB | Addnode Group vs. Addtech AB | Addnode Group vs. Vitec Software Group | Addnode Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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