Correlation Between AddLife AB and Storytel

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

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

Diversification Opportunities for AddLife AB and Storytel

-0.61

Correlation Coefficient

AddLife AB  Storytel

Excellent diversification

The 3 months correlation between AddLife and Storytel is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding AddLife AB and Storytel AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storytel AB and AddLife AB 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 AddLife AB are associated (or correlated) with Storytel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storytel AB has no effect on the direction of AddLife AB i.e., AddLife AB and Storytel go up and down completely randomly.

Pair Corralation between AddLife AB and Storytel

Assuming the 90 days trading horizon AddLife AB is expected to generate 1.86 times less return on investment than Storytel. But when comparing it to its historical volatility, AddLife AB is 1.17 times less risky than Storytel. It trades about 0.18 of its potential returns per unit of risk. Storytel AB is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  6,080  in Storytel AB on September 28, 2024 and sell it today you would earn a total of  815.00  from holding Storytel AB or generate 13.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

AddLife AB  vs.  Storytel AB

AddLife AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AddLife AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward 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.

Storytel AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Storytel AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Storytel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AddLife AB and Storytel

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

The idea behind AddLife AB and Storytel 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.