Correlation Between Fastenal and Addtech AB

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

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

Diversification Opportunities for Fastenal and Addtech AB

-0.07

Correlation Coefficient

Fastenal  Addtech AB

Good diversification

The 3 months correlation between Fastenal and Addtech is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Fastenal 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 Fastenal Company 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 Fastenal i.e., Fastenal and Addtech AB go up and down completely randomly.

Pair Corralation between Fastenal and Addtech AB

Assuming the 90 days horizon Fastenal Company is expected to generate 0.65 times more return on investment than Addtech AB. However, Fastenal Company is 1.55 times less risky than Addtech AB. It trades about 0.13 of its potential returns per unit of risk. Addtech AB is currently generating about 0.0 per unit of risk. If you would invest  3,587  in Fastenal Company on May 5, 2025 and sell it today you would earn a total of  413.00  from holding Fastenal Company or generate 11.51% return on investment over 90 days.

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

Fastenal Company  vs.  Addtech AB

Fastenal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fastenal Company are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fastenal may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Addtech AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Addtech AB has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Fastenal and Addtech AB

The main advantage of trading using opposite Fastenal and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastenal 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 Fastenal Company 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.