Correlation Between Profoto Holding and Maven Wireless

Can any of the company-specific risk be diversified away by investing in both Profoto Holding and Maven Wireless 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 Maven Wireless 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 Maven Wireless Sweden, you can compare the effects of market volatilities on Profoto Holding and Maven Wireless 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 Maven Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profoto Holding and Maven Wireless.

Diversification Opportunities for Profoto Holding and Maven Wireless

0.04

Correlation Coefficient

Profoto Holding  Maven Wireless

Significant diversification

The 3 months correlation between Profoto and Maven is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Profoto Holding AB and Maven Wireless Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maven Wireless Sweden 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 Maven Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maven Wireless Sweden has no effect on the direction of Profoto Holding i.e., Profoto Holding and Maven Wireless go up and down completely randomly.

Pair Corralation between Profoto Holding and Maven Wireless

Assuming the 90 days trading horizon Profoto Holding AB is expected to generate 0.58 times more return on investment than Maven Wireless. However, Profoto Holding AB is 1.73 times less risky than Maven Wireless. It trades about -0.04 of its potential returns per unit of risk. Maven Wireless Sweden is currently generating about -0.08 per unit of risk. If you would invest  4,220  in Profoto Holding AB on December 2, 2024 and sell it today you would lose (220.00) from holding Profoto Holding AB or give up 5.21% of portfolio value over 90 days.

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

Profoto Holding AB  vs.  Maven Wireless Sweden

Profoto Holding AB

Risk-Adjusted Performance

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 comparatively stable basic indicators, Profoto Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Maven Wireless Sweden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maven Wireless Sweden 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.

Pair Trading with Profoto Holding and Maven Wireless

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

The idea behind Profoto Holding AB and Maven Wireless Sweden 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.