Correlation Between Addnode Group and NOTE AB

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

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

Diversification Opportunities for Addnode Group and NOTE AB

-0.3

Correlation Coefficient

Addnode Group  NOTE AB

Very good diversification

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

Pair Corralation between Addnode Group and NOTE AB

Assuming the 90 days trading horizon Addnode Group AB is expected to under-perform the NOTE AB. But the stock apears to be less risky and, when comparing its historical volatility, Addnode Group AB is 1.44 times less risky than NOTE AB. The stock trades about -0.01 of its potential returns per unit of risk. The NOTE AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12,690  in NOTE AB on September 12, 2024 and sell it today you would earn a total of  900.00  from holding NOTE AB or generate 7.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Addnode Group AB  vs.  NOTE AB

Addnode Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Addnode Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Addnode Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

NOTE AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NOTE AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NOTE AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Addnode Group and NOTE AB

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

The idea behind Addnode Group AB and NOTE 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..