Correlation Between ASSA ABLOY and Profoto Holding

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

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

Diversification Opportunities for ASSA ABLOY and Profoto Holding

0.24

Correlation Coefficient

ASSA ABLOY  Profoto Holding

Modest diversification

The 3 months correlation between ASSA and Profoto is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY 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 ASSA ABLOY 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 ASSA ABLOY 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 ASSA ABLOY i.e., ASSA ABLOY and Profoto Holding go up and down completely randomly.

Pair Corralation between ASSA ABLOY and Profoto Holding

Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.6 times more return on investment than Profoto Holding. However, ASSA ABLOY AB is 1.67 times less risky than Profoto Holding. It trades about 0.14 of its potential returns per unit of risk. Profoto Holding AB is currently generating about -0.1 per unit of risk. If you would invest  28,260  in ASSA ABLOY AB on April 24, 2025 and sell it today you would earn a total of  3,280  from holding ASSA ABLOY AB or generate 11.61% return on investment over 90 days.

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

ASSA ABLOY AB  vs.  Profoto Holding AB

ASSA ABLOY AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASSA ABLOY AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASSA ABLOY may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Profoto Holding AB

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ASSA ABLOY and Profoto Holding

The main advantage of trading using opposite ASSA ABLOY and Profoto Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSA ABLOY 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 ASSA ABLOY 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.