Correlation Between ADDvise Group and Scibase AB

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

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

Diversification Opportunities for ADDvise Group and Scibase AB

0.25

Correlation Coefficient

ADDvise Group  Scibase AB

Modest diversification

The 3 months correlation between ADDvise and Scibase is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ADDvise Group B and Scibase AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scibase AB and ADDvise 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 ADDvise Group B are associated (or correlated) with Scibase AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scibase AB has no effect on the direction of ADDvise Group i.e., ADDvise Group and Scibase AB go up and down completely randomly.

Pair Corralation between ADDvise Group and Scibase AB

Assuming the 90 days trading horizon ADDvise Group B is expected to under-perform the Scibase AB. But the stock apears to be less risky and, when comparing its historical volatility, ADDvise Group B is 1.34 times less risky than Scibase AB. The stock trades about -0.23 of its potential returns per unit of risk. The Scibase AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Scibase AB on September 5, 2024 and sell it today you would lose (5.00) from holding Scibase AB or give up 12.82% of portfolio value over 90 days.

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

ADDvise Group B  vs.  Scibase AB

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Scibase AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scibase AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Scibase 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 ADDvise Group and Scibase AB

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

The idea behind ADDvise Group B and Scibase 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.