Correlation Between Sectra AB and AddLife AB
Can any of the company-specific risk be diversified away by investing in both Sectra AB and AddLife 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 Sectra AB and AddLife AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sectra AB and AddLife AB, you can compare the effects of market volatilities on Sectra AB and AddLife 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 Sectra AB with a short position of AddLife AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sectra AB and AddLife AB.
Diversification Opportunities for Sectra AB and AddLife AB
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sectra and AddLife is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sectra AB and AddLife AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AddLife AB and Sectra 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 Sectra AB are associated (or correlated) with AddLife AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AddLife AB has no effect on the direction of Sectra AB i.e., Sectra AB and AddLife AB go up and down completely randomly.
Pair Corralation between Sectra AB and AddLife AB
Assuming the 90 days trading horizon Sectra AB is expected to under-perform the AddLife AB. But the stock apears to be less risky and, when comparing its historical volatility, Sectra AB is 1.31 times less risky than AddLife AB. The stock trades about -0.27 of its potential returns per unit of risk. The AddLife AB is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 14,120 in AddLife AB on November 3, 2024 and sell it today you would earn a total of 1,030 from holding AddLife AB or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sectra AB vs. AddLife AB
Performance |
| Timeline |
| Sectra AB |
| AddLife AB |
Sectra AB and AddLife AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sectra AB and AddLife AB
The main advantage of trading using opposite Sectra AB and AddLife AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sectra AB position performs unexpectedly, AddLife 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 AddLife AB will offset losses from the drop in AddLife AB's long position.| Sectra AB vs. Vitrolife AB | Sectra AB vs. Beijer Ref AB | Sectra AB vs. Biotage AB | Sectra AB vs. CellaVision AB |
| AddLife AB vs. Addtech AB | AddLife AB vs. Lifco AB | AddLife AB vs. Indutrade AB | AddLife AB vs. Lagercrantz Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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