Correlation Between Physitrack PLC and Addtech AB

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

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

Diversification Opportunities for Physitrack PLC and Addtech AB

0.12

Correlation Coefficient

Physitrack PLC  Addtech AB

Average diversification

The 3 months correlation between Physitrack and Addtech is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Physitrack PLC and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Physitrack PLC 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 Physitrack PLC 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 Physitrack PLC i.e., Physitrack PLC and Addtech AB go up and down completely randomly.

Pair Corralation between Physitrack PLC and Addtech AB

Assuming the 90 days trading horizon Physitrack PLC is expected to generate 2.05 times more return on investment than Addtech AB. However, Physitrack PLC is 2.05 times more volatile than Addtech AB. It trades about 0.17 of its potential returns per unit of risk. Addtech AB is currently generating about -0.09 per unit of risk. If you would invest  1,195  in Physitrack PLC on April 14, 2025 and sell it today you would earn a total of  245.00  from holding Physitrack PLC or generate 20.5% return on investment over 90 days.

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

Physitrack PLC  vs.  Addtech AB

Physitrack PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Physitrack PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Physitrack PLC 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 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Addtech AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Physitrack PLC and Addtech AB

The main advantage of trading using opposite Physitrack PLC and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Physitrack PLC 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 Physitrack PLC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.