Correlation Between Addtech AB and BANK HANDLOWY

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

By analyzing existing cross correlation between Addtech AB and BANK HANDLOWY, you can compare the effects of market volatilities on Addtech AB and BANK HANDLOWY 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 BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and BANK HANDLOWY.

Diversification Opportunities for Addtech AB and BANK HANDLOWY

0.4

Correlation Coefficient

Addtech AB  BANK HANDLOWY

Very weak diversification

The 3 months correlation between Addtech and BANK is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of Addtech AB i.e., Addtech AB and BANK HANDLOWY go up and down completely randomly.

Pair Corralation between Addtech AB and BANK HANDLOWY

Assuming the 90 days trading horizon Addtech AB is expected to generate 1.82 times less return on investment than BANK HANDLOWY. But when comparing it to its historical volatility, Addtech AB is 2.08 times less risky than BANK HANDLOWY. It trades about 0.09 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  496.00  in BANK HANDLOWY on October 11, 2024 and sell it today you would earn a total of  1,649  from holding BANK HANDLOWY or generate 332.46% return on investment over 90 days.

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

Addtech AB  vs.  BANK HANDLOWY

Addtech AB

Risk-Adjusted Performance

3 of 100

Insignificant

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.

BANK HANDLOWY

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BANK HANDLOWY are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BANK HANDLOWY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Addtech AB and BANK HANDLOWY

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

The idea behind Addtech AB and BANK HANDLOWY 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.