Correlation Between Professional Holding and EuroDry

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

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

Diversification Opportunities for Professional Holding and EuroDry

-0.16

Correlation Coefficient

Professional Holding  EuroDry

Good diversification

The 3 months correlation between Professional and EuroDry is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Professional Holding Corp and EuroDry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EuroDry and Professional Holding 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 Professional Holding Corp are associated (or correlated) with EuroDry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EuroDry has no effect on the direction of Professional Holding i.e., Professional Holding and EuroDry go up and down completely randomly.

Pair Corralation between Professional Holding and EuroDry

If you would invest  2,865  in Professional Holding Corp on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Professional Holding Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Professional Holding Corp  vs.  EuroDry

Professional Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Professional Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Professional Holding is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

EuroDry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EuroDry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, EuroDry is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Professional Holding and EuroDry

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

The idea behind Professional Holding Corp and EuroDry 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.