Correlation Between NOTE AB and Proact IT

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

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

Diversification Opportunities for NOTE AB and Proact IT

0.3

Correlation Coefficient

NOTE AB  Proact IT

Weak diversification

The 3 months correlation between NOTE and Proact is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NOTE AB and Proact IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proact IT Group and NOTE 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 NOTE AB are associated (or correlated) with Proact IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proact IT Group has no effect on the direction of NOTE AB i.e., NOTE AB and Proact IT go up and down completely randomly.

Pair Corralation between NOTE AB and Proact IT

Assuming the 90 days trading horizon NOTE AB is expected to generate 1.11 times more return on investment than Proact IT. However, NOTE AB is 1.11 times more volatile than Proact IT Group. It trades about 0.15 of its potential returns per unit of risk. Proact IT Group is currently generating about 0.04 per unit of risk. If you would invest  14,800  in NOTE AB on December 29, 2024 and sell it today you would earn a total of  2,490  from holding NOTE AB or generate 16.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NOTE AB  vs.  Proact IT Group

NOTE AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NOTE AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NOTE AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Proact IT Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Proact IT Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Proact IT 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 NOTE AB and Proact IT

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

The idea behind NOTE AB and Proact IT Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.