Correlation Between Dometic Group and Profoto Holding

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

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

Diversification Opportunities for Dometic Group and Profoto Holding

-0.01

Correlation Coefficient

Dometic Group  Profoto Holding

Good diversification

The 3 months correlation between Dometic and Profoto is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dometic Group 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 Dometic 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 Dometic Group 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 Dometic Group i.e., Dometic Group and Profoto Holding go up and down completely randomly.

Pair Corralation between Dometic Group and Profoto Holding

Assuming the 90 days trading horizon Dometic Group AB is expected to under-perform the Profoto Holding. But the stock apears to be less risky and, when comparing its historical volatility, Dometic Group AB is 1.1 times less risky than Profoto Holding. The stock trades about -0.05 of its potential returns per unit of risk. The Profoto Holding AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,900  in Profoto Holding AB on December 23, 2024 and sell it today you would earn a total of  60.00  from holding Profoto Holding AB or generate 1.54% return on investment over 90 days.

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

Dometic Group AB  vs.  Profoto Holding AB

Dometic Group AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dometic Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Profoto Holding AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Profoto Holding AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Dometic Group and Profoto Holding

The main advantage of trading using opposite Dometic Group and Profoto Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dometic Group 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 Dometic Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.