Correlation Between Proact IT and Inwido AB

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

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

Diversification Opportunities for Proact IT and Inwido AB

0.49

Correlation Coefficient

Proact IT  Inwido AB

Very weak diversification

The 3 months correlation between Proact and Inwido is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Proact IT Group and Inwido AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inwido AB and Proact IT 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 Proact IT Group are associated (or correlated) with Inwido AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inwido AB has no effect on the direction of Proact IT i.e., Proact IT and Inwido AB go up and down completely randomly.

Pair Corralation between Proact IT and Inwido AB

Assuming the 90 days trading horizon Proact IT Group is expected to under-perform the Inwido AB. In addition to that, Proact IT is 1.69 times more volatile than Inwido AB. It trades about -0.07 of its total potential returns per unit of risk. Inwido AB is currently generating about 0.11 per unit of volatility. If you would invest  18,650  in Inwido AB on December 3, 2024 and sell it today you would earn a total of  1,910  from holding Inwido AB or generate 10.24% return on investment over 90 days.

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

Proact IT Group  vs.  Inwido AB

Proact IT Group

Risk-Adjusted Performance

Very Weak

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

Inwido AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inwido AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Inwido AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Proact IT and Inwido AB

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

The idea behind Proact IT Group and Inwido 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..