Correlation Between Vestum AB and AddLife AB
Can any of the company-specific risk be diversified away by investing in both Vestum 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 Vestum 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 Vestum AB and AddLife AB, you can compare the effects of market volatilities on Vestum 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 Vestum AB with a short position of AddLife AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestum AB and AddLife AB.
Diversification Opportunities for Vestum AB and AddLife AB
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vestum and AddLife is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vestum AB and AddLife AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AddLife AB and Vestum 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 Vestum 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 Vestum AB i.e., Vestum AB and AddLife AB go up and down completely randomly.
Pair Corralation between Vestum AB and AddLife AB
Assuming the 90 days trading horizon Vestum AB is expected to generate 1.29 times less return on investment than AddLife AB. In addition to that, Vestum AB is 1.45 times more volatile than AddLife AB. It trades about 0.05 of its total potential returns per unit of risk. AddLife AB is currently generating about 0.09 per unit of volatility. If you would invest 9,441 in AddLife AB on September 1, 2024 and sell it today you would earn a total of 3,869 from holding AddLife AB or generate 40.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestum AB vs. AddLife AB
Performance |
| Timeline |
| Vestum AB |
| AddLife AB |
Vestum AB and AddLife AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestum AB and AddLife AB
The main advantage of trading using opposite Vestum AB and AddLife AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestum 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.| Vestum AB vs. Hexatronic Group AB | Vestum AB vs. Storskogen Group AB | Vestum AB vs. Sinch AB | Vestum AB vs. Samhllsbyggnadsbolaget i Norden |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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