Correlation Between Profoto Holding and Bio Works

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

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

Diversification Opportunities for Profoto Holding and Bio Works

0.48

Correlation Coefficient

Profoto Holding  Bio Works

Very weak diversification

The 3 months correlation between Profoto and Bio is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Profoto Holding AB and Bio Works Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Works Technologies and Profoto Holding 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 Profoto Holding AB are associated (or correlated) with Bio Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Works Technologies has no effect on the direction of Profoto Holding i.e., Profoto Holding and Bio Works go up and down completely randomly.

Pair Corralation between Profoto Holding and Bio Works

Assuming the 90 days trading horizon Profoto Holding AB is expected to generate 0.52 times more return on investment than Bio Works. However, Profoto Holding AB is 1.94 times less risky than Bio Works. It trades about -0.04 of its potential returns per unit of risk. Bio Works Technologies AB is currently generating about -0.08 per unit of risk. If you would invest  8,182  in Profoto Holding AB on September 13, 2024 and sell it today you would lose (4,352) from holding Profoto Holding AB or give up 53.19% of portfolio value over 90 days.

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

Profoto Holding AB  vs.  Bio Works Technologies AB

Profoto Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Profoto Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bio Works Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Works Technologies AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Profoto Holding and Bio Works

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

The idea behind Profoto Holding AB and Bio Works Technologies 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.