Correlation Between AroCell AB and Addnode Group

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

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

Diversification Opportunities for AroCell AB and Addnode Group

0.59

Correlation Coefficient

AroCell AB  Addnode Group

Very weak diversification

The 3 months correlation between AroCell and Addnode is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding AroCell AB and Addnode Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addnode Group AB and AroCell 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 AroCell AB are associated (or correlated) with Addnode Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addnode Group AB has no effect on the direction of AroCell AB i.e., AroCell AB and Addnode Group go up and down completely randomly.

Pair Corralation between AroCell AB and Addnode Group

Assuming the 90 days trading horizon AroCell AB is expected to under-perform the Addnode Group. In addition to that, AroCell AB is 2.04 times more volatile than Addnode Group AB. It trades about -0.13 of its total potential returns per unit of risk. Addnode Group AB is currently generating about -0.01 per unit of volatility. If you would invest  10,630  in Addnode Group AB on September 12, 2024 and sell it today you would lose (300.00) from holding Addnode Group AB or give up 2.82% of portfolio value over 90 days.

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

AroCell AB  vs.  Addnode Group AB

AroCell AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AroCell 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.

Addnode Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Addnode Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Addnode Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AroCell AB and Addnode Group

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

The idea behind AroCell AB and Addnode Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.