Correlation Between Addtech AB and NVIDIA

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

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

Diversification Opportunities for Addtech AB and NVIDIA

-0.12

Correlation Coefficient

Addtech AB  NVIDIA

Good diversification

The 3 months correlation between Addtech and NVIDIA is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Addtech AB i.e., Addtech AB and NVIDIA go up and down completely randomly.

Pair Corralation between Addtech AB and NVIDIA

Assuming the 90 days trading horizon Addtech AB is expected to generate 0.46 times more return on investment than NVIDIA. However, Addtech AB is 2.2 times less risky than NVIDIA. It trades about 0.09 of its potential returns per unit of risk. NVIDIA is currently generating about -0.06 per unit of risk. If you would invest  2,624  in Addtech AB on December 24, 2024 and sell it today you would earn a total of  240.00  from holding Addtech AB or generate 9.15% 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.  NVIDIA

Addtech AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Addtech AB are ranked lower than 7 (%) 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 April 2025.

NVIDIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVIDIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental 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 Addtech AB and NVIDIA

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

The idea behind Addtech AB and NVIDIA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.