Correlation Between Probi AB and Vitrolife

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

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

Diversification Opportunities for Probi AB and Vitrolife

-0.55

Correlation Coefficient

Probi AB  Vitrolife

Excellent diversification

The 3 months correlation between Probi and Vitrolife is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Probi AB and Vitrolife AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitrolife 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 Vitrolife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitrolife AB has no effect on the direction of Probi AB i.e., Probi AB and Vitrolife go up and down completely randomly.

Pair Corralation between Probi AB and Vitrolife

Assuming the 90 days trading horizon Probi AB is expected to generate 2.81 times more return on investment than Vitrolife. However, Probi AB is 2.81 times more volatile than Vitrolife AB. It trades about 0.08 of its potential returns per unit of risk. Vitrolife AB is currently generating about -0.07 per unit of risk. If you would invest  27,600  in Probi AB on September 3, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Probi AB  vs.  Vitrolife 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 uncertain basic indicators, Probi AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vitrolife AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vitrolife AB 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 Probi AB and Vitrolife

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

The idea behind Probi AB and Vitrolife 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.