Correlation Between Proact IT and Vitrolife

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

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

Diversification Opportunities for Proact IT and Vitrolife

0.79

Correlation Coefficient

Proact IT  Vitrolife

Poor diversification

The 3 months correlation between Proact and Vitrolife is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Proact IT Group and Vitrolife AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitrolife AB and Proact IT 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 Proact IT Group 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 Proact IT i.e., Proact IT and Vitrolife go up and down completely randomly.

Pair Corralation between Proact IT and Vitrolife

Assuming the 90 days trading horizon Proact IT Group is expected to generate 0.66 times more return on investment than Vitrolife. However, Proact IT Group is 1.52 times less risky than Vitrolife. It trades about 0.06 of its potential returns per unit of risk. Vitrolife AB is currently generating about 0.02 per unit of risk. If you would invest  8,067  in Proact IT Group on September 4, 2024 and sell it today you would earn a total of  5,313  from holding Proact IT Group or generate 65.86% return on investment over 90 days.

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

Proact IT Group  vs.  Vitrolife AB

Proact IT Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Proact IT Group 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.

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 Proact IT and Vitrolife

The main advantage of trading using opposite Proact IT and Vitrolife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proact IT 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 Proact IT Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.