Correlation Between Dubber and PROS Holdings

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

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

Diversification Opportunities for Dubber and PROS Holdings

0.07

Correlation Coefficient

Dubber  PROS Holdings

Significant diversification

The 3 months correlation between Dubber and PROS is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dubber Limited and PROS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROS Holdings and Dubber 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 Dubber Limited are associated (or correlated) with PROS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROS Holdings has no effect on the direction of Dubber i.e., Dubber and PROS Holdings go up and down completely randomly.

Pair Corralation between Dubber and PROS Holdings

Assuming the 90 days horizon Dubber Limited is expected to under-perform the PROS Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Dubber Limited is 1.15 times less risky than PROS Holdings. The pink sheet trades about -0.21 of its potential returns per unit of risk. The PROS Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,392  in PROS Holdings on September 23, 2024 and sell it today you would lose (142.00) from holding PROS Holdings or give up 5.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Dubber Limited  vs.  PROS Holdings

Dubber Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dubber Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Dubber reported solid returns over the last few months and may actually be approaching a breakup point.

PROS Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PROS Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, PROS Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dubber and PROS Holdings

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

The idea behind Dubber Limited and PROS Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.