Correlation Between USWE Sports and Profoto Holding
Can any of the company-specific risk be diversified away by investing in both USWE Sports 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 USWE Sports and Profoto Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE Sports AB and Profoto Holding AB, you can compare the effects of market volatilities on USWE Sports 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 USWE Sports with a short position of Profoto Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE Sports and Profoto Holding.
Diversification Opportunities for USWE Sports and Profoto Holding
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between USWE and Profoto is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding USWE Sports 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 USWE Sports 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 USWE Sports 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 USWE Sports i.e., USWE Sports and Profoto Holding go up and down completely randomly.
Pair Corralation between USWE Sports and Profoto Holding
Assuming the 90 days trading horizon USWE Sports AB is expected to generate 1.19 times more return on investment than Profoto Holding. However, USWE Sports is 1.19 times more volatile than Profoto Holding AB. It trades about -0.03 of its potential returns per unit of risk. Profoto Holding AB is currently generating about -0.06 per unit of risk. If you would invest 1,475 in USWE Sports AB on December 5, 2024 and sell it today you would lose (500.00) from holding USWE Sports AB or give up 33.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.18% |
| Values | Daily Returns |
USWE Sports AB vs. Profoto Holding AB
Performance |
| Timeline |
| USWE Sports AB |
| Profoto Holding AB |
USWE Sports and Profoto Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE Sports and Profoto Holding
The main advantage of trading using opposite USWE Sports and Profoto Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE Sports 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.| USWE Sports vs. Awardit AB | ||
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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