Correlation Between USWE Sports and ADDvise Group

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

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

Diversification Opportunities for USWE Sports and ADDvise Group

-0.93

Correlation Coefficient

USWE Sports  ADDvise Group

Pay attention - limited upside

The 3 months correlation between USWE and ADDvise is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding USWE Sports AB and ADDvise Group B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADDvise Group B and USWE Sports 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 USWE Sports AB are associated (or correlated) with ADDvise Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADDvise Group B has no effect on the direction of USWE Sports i.e., USWE Sports and ADDvise Group go up and down completely randomly.

Pair Corralation between USWE Sports and ADDvise Group

Assuming the 90 days trading horizon USWE Sports AB is expected to generate 1.14 times more return on investment than ADDvise Group. However, USWE Sports is 1.14 times more volatile than ADDvise Group B. It trades about -0.01 of its potential returns per unit of risk. ADDvise Group B is currently generating about -0.03 per unit of risk. If you would invest  1,720  in USWE Sports AB on October 5, 2024 and sell it today you would lose (810.00) from holding USWE Sports AB or give up 47.09% of portfolio value over 90 days.

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

USWE Sports AB  vs.  ADDvise Group B

USWE Sports AB

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days USWE Sports AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, USWE Sports unveiled solid returns over the last few months and may actually be approaching a breakup point.

ADDvise Group B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADDvise Group B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with USWE Sports and ADDvise Group

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

The idea behind USWE Sports AB and ADDvise Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.