Correlation Between Addtech AB and Profoto Holding

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

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

Diversification Opportunities for Addtech AB and Profoto Holding

0.0

Correlation Coefficient

Addtech AB  Profoto Holding

Pay attention - limited upside

The 3 months correlation between Addtech and Profoto is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and Profoto Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profoto Holding AB and Addtech AB 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 Addtech AB are associated (or correlated) with Profoto Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profoto Holding AB has no effect on the direction of Addtech AB i.e., Addtech AB and Profoto Holding go up and down completely randomly.

Pair Corralation between Addtech AB and Profoto Holding

If you would invest  22,762  in Addtech AB on December 4, 2024 and sell it today you would earn a total of  9,738  from holding Addtech AB or generate 42.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.41%
Values	Daily Returns

Addtech AB  vs.  Profoto Holding AB

Addtech AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Addtech AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Addtech AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Profoto Holding AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Profoto Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Profoto Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Addtech AB and Profoto Holding

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

The idea behind Addtech AB and Profoto Holding 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.