Correlation Between Advanced Medical and Addtech AB

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

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

Diversification Opportunities for Advanced Medical and Addtech AB

-0.37

Correlation Coefficient

Advanced Medical  Addtech AB

Very good diversification

The 3 months correlation between Advanced and Addtech is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Advanced Medical 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 Advanced Medical Solutions are associated (or correlated) with Addtech AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech AB has no effect on the direction of Advanced Medical i.e., Advanced Medical and Addtech AB go up and down completely randomly.

Pair Corralation between Advanced Medical and Addtech AB

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 1.21 times more return on investment than Addtech AB. However, Advanced Medical is 1.21 times more volatile than Addtech AB. It trades about 0.04 of its potential returns per unit of risk. Addtech AB is currently generating about 0.04 per unit of risk. If you would invest  220.00  in Advanced Medical Solutions on April 30, 2025 and sell it today you would earn a total of  10.00  from holding Advanced Medical Solutions or generate 4.55% return on investment over 90 days.

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

Advanced Medical Solutions  vs.  Addtech AB

Advanced Medical Sol

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Medical Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Advanced Medical may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Addtech AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Addtech AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Addtech AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Advanced Medical and Addtech AB

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

The idea behind Advanced Medical Solutions and Addtech 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.