Correlation Between Addnode Group and AroCell AB

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

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

Diversification Opportunities for Addnode Group and AroCell AB

-0.39

Correlation Coefficient

Addnode Group  AroCell AB

Very good diversification

The 3 months correlation between Addnode and AroCell is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Addnode Group AB and AroCell AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AroCell AB and Addnode Group 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 Addnode Group AB are associated (or correlated) with AroCell AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AroCell AB has no effect on the direction of Addnode Group i.e., Addnode Group and AroCell AB go up and down completely randomly.

Pair Corralation between Addnode Group and AroCell AB

Assuming the 90 days trading horizon Addnode Group AB is expected to under-perform the AroCell AB. But the stock apears to be less risky and, when comparing its historical volatility, Addnode Group AB is 1.49 times less risky than AroCell AB. The stock trades about -0.04 of its potential returns per unit of risk. The AroCell AB is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  35.00  in AroCell AB on February 2, 2024 and sell it today you would earn a total of  7.00  from holding AroCell AB or generate 20.0% return on investment over 90 days.

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

Addnode Group AB  vs.  AroCell AB

Addnode Group AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Addnode Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Addnode Group may actually be approaching a critical reversion point that can send shares even higher in June 2024.

AroCell AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AroCell AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AroCell AB 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 Addnode Group and AroCell AB

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

The idea behind Addnode Group AB and AroCell 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.