Correlation Between FormPipe Software and Addnode Group

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

By analyzing existing cross correlation between FormPipe Software AB and Addnode Group AB, you can compare the effects of market volatilities on FormPipe Software and Addnode Group 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 FormPipe Software with a short position of Addnode Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of FormPipe Software and Addnode Group.

Diversification Opportunities for FormPipe Software and Addnode Group

0.22

Correlation Coefficient

FormPipe Software  Addnode Group

Modest diversification

The 3 months correlation between FormPipe and Addnode is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding FormPipe Software AB and Addnode Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addnode Group AB and FormPipe Software 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 FormPipe Software AB are associated (or correlated) with Addnode Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addnode Group AB has no effect on the direction of FormPipe Software i.e., FormPipe Software and Addnode Group go up and down completely randomly.

Pair Corralation between FormPipe Software and Addnode Group

Assuming the 90 days trading horizon FormPipe Software AB is expected to under-perform the Addnode Group. In addition to that, FormPipe Software is 1.86 times more volatile than Addnode Group AB. It trades about -0.18 of its total potential returns per unit of risk. Addnode Group AB is currently generating about 0.09 per unit of volatility. If you would invest  10,120  in Addnode Group AB on September 25, 2024 and sell it today you would earn a total of  260.00  from holding Addnode Group AB or generate 2.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

FormPipe Software AB  vs.  Addnode Group AB

FormPipe Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FormPipe Software AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Addnode Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Addnode Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Addnode Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FormPipe Software and Addnode Group

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

The idea behind FormPipe Software AB and Addnode Group AB 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 Global Correlations module to find global opportunities by holding instruments from different markets.