Correlation Between Addtech AB and FLOW TRADERS

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

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

Diversification Opportunities for Addtech AB and FLOW TRADERS

-0.14

Correlation Coefficient

Addtech AB  FLOW TRADERS

Good diversification

The 3 months correlation between Addtech and FLOW is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of Addtech AB i.e., Addtech AB and FLOW TRADERS go up and down completely randomly.

Pair Corralation between Addtech AB and FLOW TRADERS

Assuming the 90 days trading horizon Addtech AB is expected to under-perform the FLOW TRADERS. In addition to that, Addtech AB is 1.34 times more volatile than FLOW TRADERS LTD. It trades about -0.03 of its total potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.08 per unit of volatility. If you would invest  2,114  in FLOW TRADERS LTD on October 7, 2024 and sell it today you would earn a total of  82.00  from holding FLOW TRADERS LTD or generate 3.88% 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.  FLOW TRADERS LTD

Addtech AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Addtech AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Addtech AB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

FLOW TRADERS LTD

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FLOW TRADERS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Addtech AB and FLOW TRADERS

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

The idea behind Addtech AB and FLOW TRADERS LTD 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.