Correlation Between BTS Group and Probi AB

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

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

Diversification Opportunities for BTS Group and Probi AB

-0.39

Correlation Coefficient

BTS Group  Probi AB

Very good diversification

The 3 months correlation between BTS and Probi is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BTS Group AB and Probi AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Probi AB and BTS Group 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 BTS Group AB are associated (or correlated) with Probi AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Probi AB has no effect on the direction of BTS Group i.e., BTS Group and Probi AB go up and down completely randomly.

Pair Corralation between BTS Group and Probi AB

Assuming the 90 days trading horizon BTS Group AB is expected to under-perform the Probi AB. But the stock apears to be less risky and, when comparing its historical volatility, BTS Group AB is 4.39 times less risky than Probi AB. The stock trades about -0.07 of its potential returns per unit of risk. The Probi AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  27,600  in Probi AB on September 2, 2024 and sell it today you would earn a total of  7,100  from holding Probi AB or generate 25.72% return on investment over 90 days.

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

BTS Group AB  vs.  Probi AB

BTS Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Probi AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Probi AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Probi AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BTS Group and Probi AB

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

The idea behind BTS Group AB and Probi 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.