Correlation Between Surgical Science and AddLife AB

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

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

Diversification Opportunities for Surgical Science and AddLife AB

-0.48

Correlation Coefficient

Surgical Science  AddLife AB

Very good diversification

The 3 months correlation between Surgical and AddLife is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Surgical Science Sweden and AddLife AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AddLife AB and Surgical Science 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 Surgical Science Sweden are associated (or correlated) with AddLife AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AddLife AB has no effect on the direction of Surgical Science i.e., Surgical Science and AddLife AB go up and down completely randomly.

Pair Corralation between Surgical Science and AddLife AB

Assuming the 90 days trading horizon Surgical Science Sweden is expected to under-perform the AddLife AB. In addition to that, Surgical Science is 1.86 times more volatile than AddLife AB. It trades about -0.03 of its total potential returns per unit of risk. AddLife AB is currently generating about 0.24 per unit of volatility. If you would invest  10,870  in AddLife AB on March 14, 2024 and sell it today you would earn a total of  1,290  from holding AddLife AB or generate 11.87% return on investment over 90 days.

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

Surgical Science Sweden  vs.  AddLife AB

Surgical Science Sweden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surgical Science Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Surgical Science is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

AddLife AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AddLife AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, AddLife AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Surgical Science and AddLife AB

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

The idea behind Surgical Science Sweden and AddLife 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.