Correlation Between Profoto Holding and SkiStar AB

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

Diversification Opportunities for Profoto Holding and SkiStar AB

-0.84

Correlation Coefficient

Profoto Holding  SkiStar AB

Pay attention - limited upside

The 3 months correlation between Profoto and SkiStar is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Profoto Holding AB and SkiStar AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkiStar AB 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 SkiStar AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkiStar AB has no effect on the direction of Profoto Holding i.e., Profoto Holding and SkiStar AB go up and down completely randomly.

Pair Corralation between Profoto Holding and SkiStar AB

Assuming the 90 days trading horizon Profoto Holding AB is expected to under-perform the SkiStar AB. In addition to that, Profoto Holding is 2.89 times more volatile than SkiStar AB. It trades about -0.3 of its total potential returns per unit of risk. SkiStar AB is currently generating about 0.1 per unit of volatility. If you would invest  16,410  in SkiStar AB on September 1, 2024 and sell it today you would earn a total of  390.00  from holding SkiStar AB or generate 2.38% return on investment over 90 days.

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

Profoto Holding AB  vs.  SkiStar 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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SkiStar AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SkiStar AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, SkiStar AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Profoto Holding and SkiStar AB

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

The idea behind Profoto Holding AB and SkiStar 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.