Correlation Between Proact IT and Niloerngruppen

Can any of the company-specific risk be diversified away by investing in both Proact IT and Niloerngruppen 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 Niloerngruppen 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 Niloerngruppen AB Series, you can compare the effects of market volatilities on Proact IT and Niloerngruppen 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 Niloerngruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proact IT and Niloerngruppen.

Diversification Opportunities for Proact IT and Niloerngruppen

0.06

Correlation Coefficient

Proact IT  Niloerngruppen

Significant diversification

The 3 months correlation between Proact and Niloerngruppen is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Proact IT Group and Niloerngruppen AB Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niloerngruppen AB Series 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 Niloerngruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niloerngruppen AB Series has no effect on the direction of Proact IT i.e., Proact IT and Niloerngruppen go up and down completely randomly.

Pair Corralation between Proact IT and Niloerngruppen

Assuming the 90 days trading horizon Proact IT Group is expected to under-perform the Niloerngruppen. In addition to that, Proact IT is 1.61 times more volatile than Niloerngruppen AB Series. It trades about -0.07 of its total potential returns per unit of risk. Niloerngruppen AB Series is currently generating about -0.01 per unit of volatility. If you would invest  6,780  in Niloerngruppen AB Series on December 3, 2024 and sell it today you would lose (140.00) from holding Niloerngruppen AB Series or give up 2.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Proact IT Group  vs.  Niloerngruppen AB Series

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.

Niloerngruppen AB Series

Risk-Adjusted Performance

Very Weak

Over the last 90 days Niloerngruppen AB Series has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Niloerngruppen 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 Proact IT and Niloerngruppen

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

The idea behind Proact IT Group and Niloerngruppen AB Series 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.