Correlation Between PKSHA TECHNOLOGY and Addtech AB

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

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

Diversification Opportunities for PKSHA TECHNOLOGY and Addtech AB

0.48

Correlation Coefficient

PKSHA TECHNOLOGY  Addtech AB

Very weak diversification

The 3 months correlation between PKSHA and Addtech is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC 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 PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and Addtech AB go up and down completely randomly.

Pair Corralation between PKSHA TECHNOLOGY and Addtech AB

Assuming the 90 days horizon PKSHA TECHNOLOGY is expected to generate 1.5 times less return on investment than Addtech AB. In addition to that, PKSHA TECHNOLOGY is 1.89 times more volatile than Addtech AB. It trades about 0.03 of its total potential returns per unit of risk. Addtech AB is currently generating about 0.09 per unit of volatility. If you would invest  1,698  in Addtech AB on October 9, 2024 and sell it today you would earn a total of  940.00  from holding Addtech AB or generate 55.36% return on investment over 90 days.

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

PKSHA TECHNOLOGY INC  vs.  Addtech AB

PKSHA TECHNOLOGY INC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PKSHA TECHNOLOGY INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PKSHA TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Addtech AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Addtech AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Addtech AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PKSHA TECHNOLOGY and Addtech AB

The main advantage of trading using opposite PKSHA TECHNOLOGY and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC 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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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.