Correlation Between Kratos Defense and Addtech AB

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

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

Diversification Opportunities for Kratos Defense and Addtech AB

-0.28

Correlation Coefficient

Kratos Defense  Addtech AB

Very good diversification

The 3 months correlation between Kratos and Addtech is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Kratos Defense 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 Kratos Defense Security 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 Kratos Defense i.e., Kratos Defense and Addtech AB go up and down completely randomly.

Pair Corralation between Kratos Defense and Addtech AB

Given the investment horizon of 90 days Kratos Defense Security is expected to generate 1.76 times more return on investment than Addtech AB. However, Kratos Defense is 1.76 times more volatile than Addtech AB. It trades about 0.31 of its potential returns per unit of risk. Addtech AB is currently generating about -0.05 per unit of risk. If you would invest  3,513  in Kratos Defense Security on May 19, 2025 and sell it today you would earn a total of  3,337  from holding Kratos Defense Security or generate 94.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Kratos Defense Security  vs.  Addtech AB

Kratos Defense Security

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kratos Defense Security are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kratos Defense unveiled solid returns over the last few months and may actually be approaching a breakup point.

Addtech AB

Risk-Adjusted Performance

Weakest

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 Kratos Defense and Addtech AB

The main advantage of trading using opposite Kratos Defense and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kratos Defense 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 Kratos Defense Security 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.