Correlation Between Addtech AB and NEW PACIFIC

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

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

Diversification Opportunities for Addtech AB and NEW PACIFIC

-0.16

Correlation Coefficient

Addtech AB  NEW PACIFIC

Good diversification

The 3 months correlation between Addtech and NEW is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and NEW PACIFIC METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW PACIFIC METALS and Addtech AB 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 Addtech AB are associated (or correlated) with NEW PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW PACIFIC METALS has no effect on the direction of Addtech AB i.e., Addtech AB and NEW PACIFIC go up and down completely randomly.

Pair Corralation between Addtech AB and NEW PACIFIC

Assuming the 90 days trading horizon Addtech AB is expected to generate 1.92 times less return on investment than NEW PACIFIC. But when comparing it to its historical volatility, Addtech AB is 5.8 times less risky than NEW PACIFIC. It trades about 0.13 of its potential returns per unit of risk. NEW PACIFIC METALS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  114.00  in NEW PACIFIC METALS on October 23, 2024 and sell it today you would earn a total of  0.00  from holding NEW PACIFIC METALS or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Addtech AB  vs.  NEW PACIFIC METALS

Addtech AB

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Addtech AB are ranked lower than 3 (%) 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.

NEW PACIFIC METALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEW PACIFIC METALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Addtech AB and NEW PACIFIC

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

The idea behind Addtech AB and NEW PACIFIC METALS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.