Correlation Between RATIONAL Aktiengesellscha and Addtech AB
Can any of the company-specific risk be diversified away by investing in both RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha and Addtech AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RATIONAL Aktiengesellschaft and Addtech AB, you can compare the effects of market volatilities on RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha with a short position of Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of RATIONAL Aktiengesellscha and Addtech AB.
Diversification Opportunities for RATIONAL Aktiengesellscha and Addtech AB
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RATIONAL and Addtech is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding RATIONAL Aktiengesellschaft and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellschaft 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 RATIONAL Aktiengesellscha i.e., RATIONAL Aktiengesellscha and Addtech AB go up and down completely randomly.
Pair Corralation between RATIONAL Aktiengesellscha and Addtech AB
Assuming the 90 days horizon RATIONAL Aktiengesellschaft is expected to under-perform the Addtech AB. But the stock apears to be less risky and, when comparing its historical volatility, RATIONAL Aktiengesellschaft is 1.41 times less risky than Addtech AB. The stock trades about -0.04 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 2,646 in Addtech AB on November 3, 2024 and sell it today you would earn a total of 98.00 from holding Addtech AB or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.5% |
| Values | Daily Returns |
RATIONAL Aktiengesellschaft vs. Addtech AB
Performance |
| Timeline |
| RATIONAL Aktiengesellscha |
| Addtech AB |
RATIONAL Aktiengesellscha and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RATIONAL Aktiengesellscha and Addtech AB
The main advantage of trading using opposite RATIONAL Aktiengesellscha and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RATIONAL Aktiengesellscha 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.The idea behind RATIONAL Aktiengesellschaft and Addtech 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.
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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