Correlation Between Cuentas and SpringBig Holdings

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

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

Diversification Opportunities for Cuentas and SpringBig Holdings

0.15

Correlation Coefficient

Cuentas  SpringBig Holdings

Average diversification

The 3 months correlation between Cuentas and SpringBig is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cuentas and SpringBig Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpringBig Holdings and Cuentas 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 Cuentas are associated (or correlated) with SpringBig Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpringBig Holdings has no effect on the direction of Cuentas i.e., Cuentas and SpringBig Holdings go up and down completely randomly.

Pair Corralation between Cuentas and SpringBig Holdings

Given the investment horizon of 90 days Cuentas is expected to under-perform the SpringBig Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cuentas is 1.13 times less risky than SpringBig Holdings. The pink sheet trades about -0.08 of its potential returns per unit of risk. The SpringBig Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  72.00  in SpringBig Holdings on October 5, 2024 and sell it today you would lose (38.00) from holding SpringBig Holdings or give up 52.78% of portfolio value over 90 days.

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

Cuentas  vs.  SpringBig Holdings

Cuentas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cuentas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Cuentas is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

SpringBig Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SpringBig Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, SpringBig Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cuentas and SpringBig Holdings

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

The idea behind Cuentas and SpringBig Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.