Correlation Between Arctic Blue and Profoto Holding

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

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

Diversification Opportunities for Arctic Blue and Profoto Holding

-0.16

Correlation Coefficient

Arctic Blue  Profoto Holding

Good diversification

The 3 months correlation between Arctic and Profoto is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Blue Beverages 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 Arctic Blue 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 Arctic Blue Beverages 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 Arctic Blue i.e., Arctic Blue and Profoto Holding go up and down completely randomly.

Pair Corralation between Arctic Blue and Profoto Holding

Assuming the 90 days trading horizon Arctic Blue Beverages is expected to generate 13.74 times more return on investment than Profoto Holding. However, Arctic Blue is 13.74 times more volatile than Profoto Holding AB. It trades about 0.26 of its potential returns per unit of risk. Profoto Holding AB is currently generating about 0.01 per unit of risk. If you would invest  11.00  in Arctic Blue Beverages on December 4, 2024 and sell it today you would earn a total of  172.00  from holding Arctic Blue Beverages or generate 1563.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Arctic Blue Beverages  vs.  Profoto Holding AB

Arctic Blue Beverages

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Blue Beverages are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Arctic Blue sustained solid returns over the last few months and may actually be approaching a breakup point.

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Arctic Blue and Profoto Holding

The main advantage of trading using opposite Arctic Blue and Profoto Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Blue 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 Arctic Blue Beverages 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.