Correlation Between Thule Group and Profoto Holding

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

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

Diversification Opportunities for Thule Group and Profoto Holding

-0.76

Correlation Coefficient

Thule Group  Profoto Holding

Pay attention - limited upside

The 3 months correlation between Thule and Profoto is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Thule Group AB and Profoto Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profoto Holding AB and Thule Group 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 Thule Group AB are associated (or correlated) with Profoto Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profoto Holding AB has no effect on the direction of Thule Group i.e., Thule Group and Profoto Holding go up and down completely randomly.

Pair Corralation between Thule Group and Profoto Holding

Assuming the 90 days trading horizon Thule Group AB is expected to generate 0.73 times more return on investment than Profoto Holding. However, Thule Group AB is 1.37 times less risky than Profoto Holding. It trades about -0.06 of its potential returns per unit of risk. Profoto Holding AB is currently generating about -0.3 per unit of risk. If you would invest  35,620  in Thule Group AB on September 1, 2024 and sell it today you would lose (1,280) from holding Thule Group AB or give up 3.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Thule Group AB  vs.  Profoto Holding AB

Thule Group AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thule Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Thule Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Thule Group and Profoto Holding

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

The idea behind Thule Group AB and Profoto Holding 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.