Correlation Between Also Holding and Adval Tech

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

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

Diversification Opportunities for Also Holding and Adval Tech

-0.72

Correlation Coefficient

Also Holding  Adval Tech

Pay attention - limited upside

The 3 months correlation between Also and Adval is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Also Holding AG and Adval Tech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adval Tech Holding and Also Holding 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 Also Holding AG are associated (or correlated) with Adval Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adval Tech Holding has no effect on the direction of Also Holding i.e., Also Holding and Adval Tech go up and down completely randomly.

Pair Corralation between Also Holding and Adval Tech

Assuming the 90 days trading horizon Also Holding AG is expected to generate 1.0 times more return on investment than Adval Tech. However, Also Holding AG is 1.0 times less risky than Adval Tech. It trades about 0.31 of its potential returns per unit of risk. Adval Tech Holding is currently generating about -0.09 per unit of risk. If you would invest  25,200  in Also Holding AG on December 2, 2024 and sell it today you would earn a total of  2,650  from holding Also Holding AG or generate 10.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.91%
Values	Daily Returns

Also Holding AG  vs.  Adval Tech Holding

Also Holding AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Also Holding AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Also Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Adval Tech Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adval Tech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Adval Tech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Also Holding and Adval Tech

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

The idea behind Also Holding AG and Adval Tech Holding 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.