Correlation Between Profoto Holding and Truecaller

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

Diversification Opportunities for Profoto Holding and Truecaller

0.39

Correlation Coefficient

Profoto Holding  Truecaller

Weak diversification

The 3 months correlation between Profoto and Truecaller is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Profoto Holding AB and Truecaller AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truecaller 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 Truecaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truecaller AB has no effect on the direction of Profoto Holding i.e., Profoto Holding and Truecaller go up and down completely randomly.

Pair Corralation between Profoto Holding and Truecaller

Assuming the 90 days trading horizon Profoto Holding AB is expected to under-perform the Truecaller. But the stock apears to be less risky and, when comparing its historical volatility, Profoto Holding AB is 1.38 times less risky than Truecaller. The stock trades about 0.0 of its potential returns per unit of risk. The Truecaller AB is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  5,085  in Truecaller AB on December 2, 2024 and sell it today you would earn a total of  3,065  from holding Truecaller AB or generate 60.28% return on investment over 90 days.

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

Profoto Holding AB  vs.  Truecaller AB

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.

Truecaller AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Truecaller AB are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Truecaller sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Profoto Holding and Truecaller

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

The idea behind Profoto Holding AB and Truecaller 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .