Correlation Between Softronic and Proact IT
Can any of the company-specific risk be diversified away by investing in both Softronic and Proact IT 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 Softronic and Proact IT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softronic AB and Proact IT Group, you can compare the effects of market volatilities on Softronic and Proact IT 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 Softronic with a short position of Proact IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softronic and Proact IT.
Diversification Opportunities for Softronic and Proact IT
Pay attention - limited upside
The 3 months correlation between Softronic and Proact is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and Proact IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proact IT Group and Softronic 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 Softronic AB are associated (or correlated) with Proact IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proact IT Group has no effect on the direction of Softronic i.e., Softronic and Proact IT go up and down completely randomly.
Pair Corralation between Softronic and Proact IT
Assuming the 90 days trading horizon Softronic AB is expected to generate 1.09 times more return on investment than Proact IT. However, Softronic is 1.09 times more volatile than Proact IT Group. It trades about 0.12 of its potential returns per unit of risk. Proact IT Group is currently generating about -0.12 per unit of risk. If you would invest 2,365 in Softronic AB on September 3, 2024 and sell it today you would earn a total of 70.00 from holding Softronic AB or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Softronic AB vs. Proact IT Group
Performance |
| Timeline |
| Softronic AB |
| Proact IT Group |
Softronic and Proact IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softronic and Proact IT
The main advantage of trading using opposite Softronic and Proact IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softronic position performs unexpectedly, Proact IT 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 Proact IT will offset losses from the drop in Proact IT's long position.| Softronic vs. Svenska Aerogel Holding | Softronic vs. Acarix AS | Softronic vs. Clean Motion AB | Softronic vs. AroCell AB |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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