Correlation Between Addtech AB and SVENSKA CELLULO

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

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

Diversification Opportunities for Addtech AB and SVENSKA CELLULO

0.05

Correlation Coefficient

Addtech AB  SVENSKA CELLULO

Significant diversification

The 3 months correlation between Addtech and SVENSKA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and SVENSKA CELLULO B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVENSKA CELLULO B 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 SVENSKA CELLULO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVENSKA CELLULO B has no effect on the direction of Addtech AB i.e., Addtech AB and SVENSKA CELLULO go up and down completely randomly.

Pair Corralation between Addtech AB and SVENSKA CELLULO

Assuming the 90 days trading horizon Addtech AB is expected to generate 0.9 times more return on investment than SVENSKA CELLULO. However, Addtech AB is 1.12 times less risky than SVENSKA CELLULO. It trades about -0.11 of its potential returns per unit of risk. SVENSKA CELLULO B is currently generating about -0.13 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Addtech AB  vs.  SVENSKA CELLULO B

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.

SVENSKA CELLULO B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVENSKA CELLULO B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SVENSKA CELLULO 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 SVENSKA CELLULO

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

The idea behind Addtech AB and SVENSKA CELLULO B 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.