Correlation Between Addnode Group and Serstech

Can any of the company-specific risk be diversified away by investing in both Addnode Group and Serstech 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 Serstech 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 Serstech AB, you can compare the effects of market volatilities on Addnode Group and Serstech 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 Serstech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addnode Group and Serstech.

Diversification Opportunities for Addnode Group and Serstech

-0.34

Correlation Coefficient

Addnode Group  Serstech

Very good diversification

The 3 months correlation between Addnode and Serstech is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Addnode Group AB and Serstech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serstech 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 Serstech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serstech AB has no effect on the direction of Addnode Group i.e., Addnode Group and Serstech go up and down completely randomly.

Pair Corralation between Addnode Group and Serstech

Assuming the 90 days trading horizon Addnode Group AB is expected to generate 0.58 times more return on investment than Serstech. However, Addnode Group AB is 1.73 times less risky than Serstech. It trades about -0.01 of its potential returns per unit of risk. Serstech AB is currently generating about -0.11 per unit of risk. If you would invest  10,380  in Addnode Group AB on December 30, 2024 and sell it today you would lose (415.00) from holding Addnode Group AB or give up 4.0% of portfolio value over 90 days.

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

Addnode Group AB  vs.  Serstech AB

Addnode Group AB

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to short-term losses for the investors.

Serstech AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Serstech AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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 Addnode Group and Serstech

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

The idea behind Addnode Group AB and Serstech 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.