Correlation Between Advenica and ADDvise Group

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

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

Diversification Opportunities for Advenica and ADDvise Group

-0.41

Correlation Coefficient

Advenica  ADDvise Group

Very good diversification

The 3 months correlation between Advenica and ADDvise is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Advenica AB and ADDvise Group B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADDvise Group B and Advenica 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 Advenica AB are associated (or correlated) with ADDvise Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADDvise Group B has no effect on the direction of Advenica i.e., Advenica and ADDvise Group go up and down completely randomly.

Pair Corralation between Advenica and ADDvise Group

Assuming the 90 days trading horizon Advenica AB is expected to generate 0.91 times more return on investment than ADDvise Group. However, Advenica AB is 1.1 times less risky than ADDvise Group. It trades about 0.04 of its potential returns per unit of risk. ADDvise Group B is currently generating about -0.05 per unit of risk. If you would invest  910.00  in Advenica AB on December 2, 2024 and sell it today you would earn a total of  440.00  from holding Advenica AB or generate 48.35% return on investment over 90 days.

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

Advenica AB  vs.  ADDvise Group B

Advenica AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advenica AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Advenica unveiled solid returns over the last few months and may actually be approaching a breakup point.

ADDvise Group B

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADDvise Group B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Advenica and ADDvise Group

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

The idea behind Advenica AB and ADDvise Group B 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.