Correlation Between Alcadon Group and Advenica

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

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

Diversification Opportunities for Alcadon Group and Advenica

0.89

Correlation Coefficient

Alcadon Group  Advenica

Very poor diversification

The 3 months correlation between Alcadon and Advenica is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alcadon Group AB and Advenica AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advenica AB and Alcadon 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 Alcadon Group AB are associated (or correlated) with Advenica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advenica AB has no effect on the direction of Alcadon Group i.e., Alcadon Group and Advenica go up and down completely randomly.

Pair Corralation between Alcadon Group and Advenica

Assuming the 90 days trading horizon Alcadon Group AB is expected to under-perform the Advenica. But the stock apears to be less risky and, when comparing its historical volatility, Alcadon Group AB is 1.57 times less risky than Advenica. The stock trades about -0.06 of its potential returns per unit of risk. The Advenica AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  870.00  in Advenica AB on September 14, 2024 and sell it today you would earn a total of  124.00  from holding Advenica AB or generate 14.25% return on investment over 90 days.

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

Alcadon Group AB  vs.  Advenica AB

Alcadon Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alcadon Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Advenica AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advenica AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alcadon Group and Advenica

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

The idea behind Alcadon Group AB and Advenica 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.