Correlation Between Fabege AB and Sprint Bioscience

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

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

Diversification Opportunities for Fabege AB and Sprint Bioscience

-0.12

Correlation Coefficient

Fabege AB  Sprint Bioscience

Good diversification

The 3 months correlation between Fabege and Sprint is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fabege AB and Sprint Bioscience AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprint Bioscience and Fabege AB 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 Fabege AB are associated (or correlated) with Sprint Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprint Bioscience has no effect on the direction of Fabege AB i.e., Fabege AB and Sprint Bioscience go up and down completely randomly.

Pair Corralation between Fabege AB and Sprint Bioscience

Assuming the 90 days trading horizon Fabege AB is expected to under-perform the Sprint Bioscience. But the stock apears to be less risky and, when comparing its historical volatility, Fabege AB is 2.65 times less risky than Sprint Bioscience. The stock trades about -0.03 of its potential returns per unit of risk. The Sprint Bioscience AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Sprint Bioscience AB on October 20, 2024 and sell it today you would earn a total of  39.00  from holding Sprint Bioscience AB or generate 30.47% return on investment over 90 days.

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

Fabege AB  vs.  Sprint Bioscience AB

Fabege AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fabege AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fabege AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sprint Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprint Bioscience AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sprint Bioscience is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fabege AB and Sprint Bioscience

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

The idea behind Fabege AB and Sprint Bioscience 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.