Correlation Between Probi AB and XSpray Pharma

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

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

Diversification Opportunities for Probi AB and XSpray Pharma

-0.68

Correlation Coefficient

Probi AB  XSpray Pharma

Excellent diversification

The 3 months correlation between Probi and XSpray is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Probi AB and XSpray Pharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XSpray Pharma 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 XSpray Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XSpray Pharma AB has no effect on the direction of Probi AB i.e., Probi AB and XSpray Pharma go up and down completely randomly.

Pair Corralation between Probi AB and XSpray Pharma

Assuming the 90 days trading horizon Probi AB is expected to generate 1.26 times more return on investment than XSpray Pharma. However, Probi AB is 1.26 times more volatile than XSpray Pharma AB. It trades about 0.09 of its potential returns per unit of risk. XSpray Pharma AB is currently generating about -0.18 per unit of risk. If you would invest  27,700  in Probi AB on October 26, 2024 and sell it today you would earn a total of  7,200  from holding Probi AB or generate 25.99% return on investment over 90 days.

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

Probi AB  vs.  XSpray Pharma AB

Probi AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Probi AB are ranked lower than 7 (%) 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.

XSpray Pharma AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XSpray Pharma AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Probi AB and XSpray Pharma

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

The idea behind Probi AB and XSpray Pharma 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.