Correlation Between Probi AB and BTS Group

Can any of the company-specific risk be diversified away by investing in both Probi AB and BTS Group 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 Probi AB and BTS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Probi AB and BTS Group

-0.32

Correlation Coefficient

Probi AB  BTS Group

Very good diversification

The 3 months correlation between Probi and BTS is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Probi AB and BTS Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS Group AB and Probi AB 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 Probi AB are associated (or correlated) with BTS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS Group AB has no effect on the direction of Probi AB i.e., Probi AB and BTS Group go up and down completely randomly.

Pair Corralation between Probi AB and BTS Group

Assuming the 90 days trading horizon Probi AB is expected to generate 4.52 times more return on investment than BTS Group. However, Probi AB is 4.52 times more volatile than BTS Group AB. It trades about 0.08 of its potential returns per unit of risk. BTS Group AB is currently generating about -0.04 per unit of risk. If you would invest  27,600  in Probi AB on August 31, 2024 and sell it today you would earn a total of  7,100  from holding Probi AB or generate 25.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Probi AB  vs.  BTS Group AB

Probi AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Probi AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Probi AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

BTS Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Probi AB and BTS Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.