Correlation Between Lamar Advertising and Addtech AB

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

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

Diversification Opportunities for Lamar Advertising and Addtech AB

0.47

Correlation Coefficient

Lamar Advertising  Addtech AB

Very weak diversification

The 3 months correlation between Lamar and Addtech is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Lamar Advertising 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 Lamar Advertising 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 Lamar Advertising i.e., Lamar Advertising and Addtech AB go up and down completely randomly.

Pair Corralation between Lamar Advertising and Addtech AB

Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.69 times more return on investment than Addtech AB. However, Lamar Advertising is 1.44 times less risky than Addtech AB. It trades about 0.18 of its potential returns per unit of risk. Addtech AB is currently generating about 0.1 per unit of risk. If you would invest  9,129  in Lamar Advertising on April 21, 2025 and sell it today you would earn a total of  1,571  from holding Lamar Advertising or generate 17.21% return on investment over 90 days.

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

Lamar Advertising  vs.  Addtech AB

Lamar Advertising

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lamar Advertising are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lamar Advertising unveiled solid returns over the last few months and may actually be approaching a breakup point.

Addtech AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Addtech AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Addtech AB reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lamar Advertising and Addtech AB

The main advantage of trading using opposite Lamar Advertising and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising 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 Lamar Advertising 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.