Correlation Between Addtech AB and Media

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

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

Diversification Opportunities for Addtech AB and Media

-0.34

Correlation Coefficient

Addtech AB  Media

Very good diversification

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

Pair Corralation between Addtech AB and Media

Assuming the 90 days trading horizon Addtech AB is expected to generate 0.36 times more return on investment than Media. However, Addtech AB is 2.81 times less risky than Media. It trades about -0.11 of its potential returns per unit of risk. Media and Games is currently generating about -0.29 per unit of risk. If you would invest  2,698  in Addtech AB on October 10, 2024 and sell it today you would lose (60.00) from holding Addtech AB or give up 2.22% of portfolio value over 90 days.

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

Addtech AB  vs.  Media and Games

Addtech AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Addtech AB are ranked lower than 2 (%) 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.

Media and Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Media and Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Media 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 Media

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

The idea behind Addtech AB and Media and Games 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..