Correlation Between Addtech AB and GOME Retail

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

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

Diversification Opportunities for Addtech AB and GOME Retail

-0.26

Correlation Coefficient

Addtech AB  GOME Retail

Very good diversification

The 3 months correlation between Addtech and GOME is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and GOME Retail Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOME Retail Holdings 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 GOME Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOME Retail Holdings has no effect on the direction of Addtech AB i.e., Addtech AB and GOME Retail go up and down completely randomly.

Pair Corralation between Addtech AB and GOME Retail

If you would invest  2,624  in Addtech AB on October 26, 2024 and sell it today you would earn a total of  106.00  from holding Addtech AB or generate 4.04% return on investment over 90 days.

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

Addtech AB  vs.  GOME Retail Holdings

Addtech AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Addtech AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Addtech AB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GOME Retail Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GOME Retail Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GOME Retail unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Addtech AB and GOME Retail

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

The idea behind Addtech AB and GOME Retail Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.