Correlation Between Eolus Vind and Sinch AB

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

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

Diversification Opportunities for Eolus Vind and Sinch AB

0.44

Correlation Coefficient

Eolus Vind  Sinch AB

Very weak diversification

The 3 months correlation between Eolus and Sinch is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eolus Vind AB and Sinch AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinch AB and Eolus Vind 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 Eolus Vind AB are associated (or correlated) with Sinch AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinch AB has no effect on the direction of Eolus Vind i.e., Eolus Vind and Sinch AB go up and down completely randomly.

Pair Corralation between Eolus Vind and Sinch AB

Assuming the 90 days trading horizon Eolus Vind is expected to generate 1.07 times less return on investment than Sinch AB. But when comparing it to its historical volatility, Eolus Vind AB is 1.15 times less risky than Sinch AB. It trades about 0.15 of its potential returns per unit of risk. Sinch AB is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,973  in Sinch AB on November 20, 2024 and sell it today you would earn a total of  562.00  from holding Sinch AB or generate 28.48% return on investment over 90 days.

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

Eolus Vind AB  vs.  Sinch AB

Eolus Vind AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eolus Vind AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Eolus Vind sustained solid returns over the last few months and may actually be approaching a breakup point.

Sinch AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinch AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sinch AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eolus Vind and Sinch AB

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

The idea behind Eolus Vind AB and Sinch 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.