Correlation Between Addtech and Ferrexpo PLC

Can any of the company-specific risk be diversified away by investing in both Addtech and Ferrexpo PLC 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 Addtech and Ferrexpo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Addtech and Ferrexpo PLC, you can compare the effects of market volatilities on Addtech and Ferrexpo PLC 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 Addtech with a short position of Ferrexpo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech and Ferrexpo PLC.

Diversification Opportunities for Addtech and Ferrexpo PLC

-0.3

Correlation Coefficient

Addtech  Ferrexpo PLC

Very good diversification

The 3 months correlation between Addtech and Ferrexpo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Addtech and Ferrexpo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrexpo PLC and Addtech 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 Addtech are associated (or correlated) with Ferrexpo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrexpo PLC has no effect on the direction of Addtech i.e., Addtech and Ferrexpo PLC go up and down completely randomly.

Pair Corralation between Addtech and Ferrexpo PLC

Assuming the 90 days trading horizon Addtech is expected to generate 0.22 times more return on investment than Ferrexpo PLC. However, Addtech is 4.53 times less risky than Ferrexpo PLC. It trades about 0.01 of its potential returns per unit of risk. Ferrexpo PLC is currently generating about -0.07 per unit of risk. If you would invest  31,570  in Addtech on December 4, 2024 and sell it today you would lose (60.00) from holding Addtech or give up 0.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Addtech  vs.  Ferrexpo PLC

Addtech

Risk-Adjusted Performance

Weak

Over the last 90 days Addtech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Addtech is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ferrexpo PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ferrexpo PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Addtech and Ferrexpo PLC

The main advantage of trading using opposite Addtech and Ferrexpo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech position performs unexpectedly, Ferrexpo PLC 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 Ferrexpo PLC will offset losses from the drop in Ferrexpo PLC's long position.

The idea behind Addtech and Ferrexpo PLC 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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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.