Correlation Between Troax Group and Addtech AB
Can any of the company-specific risk be diversified away by investing in both Troax 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 Troax 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 Troax Group AB and Addtech AB, you can compare the effects of market volatilities on Troax 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 Troax Group with a short position of Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Troax Group and Addtech AB.
Diversification Opportunities for Troax Group and Addtech AB
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Troax and Addtech is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Troax 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 Troax 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 Troax 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 Troax Group i.e., Troax Group and Addtech AB go up and down completely randomly.
Pair Corralation between Troax Group and Addtech AB
Assuming the 90 days trading horizon Troax Group is expected to generate 1.54 times less return on investment than Addtech AB. In addition to that, Troax Group is 1.0 times more volatile than Addtech AB. It trades about 0.1 of its total potential returns per unit of risk. Addtech AB is currently generating about 0.15 per unit of volatility. If you would invest 27,980 in Addtech AB on August 25, 2024 and sell it today you would earn a total of 1,860 from holding Addtech AB or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Troax Group AB vs. Addtech AB
Performance |
| Timeline |
| Troax Group AB |
| Addtech AB |
Troax Group and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Troax Group and Addtech AB
The main advantage of trading using opposite Troax Group and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Troax 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.The idea behind Troax Group AB 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.| 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 Stocks Directory module to find actively traded stocks across global markets.
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