Correlation Between Addtech and Epwin Group

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

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

Diversification Opportunities for Addtech and Epwin Group

-0.14

Correlation Coefficient

Addtech  Epwin Group

Good diversification

The 3 months correlation between Addtech and Epwin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Addtech and Epwin Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epwin Group PLC and Addtech 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 are associated (or correlated) with Epwin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epwin Group PLC has no effect on the direction of Addtech i.e., Addtech and Epwin Group go up and down completely randomly.

Pair Corralation between Addtech and Epwin Group

Assuming the 90 days trading horizon Addtech is expected to generate 4.64 times less return on investment than Epwin Group. In addition to that, Addtech is 1.28 times more volatile than Epwin Group PLC. It trades about 0.02 of its total potential returns per unit of risk. Epwin Group PLC is currently generating about 0.12 per unit of volatility. If you would invest  9,500  in Epwin Group PLC on September 12, 2024 and sell it today you would earn a total of  900.00  from holding Epwin Group PLC or generate 9.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Addtech  vs.  Epwin Group PLC

Addtech

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Addtech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Addtech is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Epwin Group PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Epwin Group PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Epwin Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Addtech and Epwin Group

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

The idea behind Addtech and Epwin Group PLC 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 Stocks Directory module to find actively traded stocks across global markets.