Correlation Between Media and Sinch AB

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

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

Diversification Opportunities for Media and Sinch AB

0.74

Correlation Coefficient

Media  Sinch AB

Poor diversification

The 3 months correlation between Media and Sinch is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Sinch AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinch AB and Media 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 Media and Games 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 Media i.e., Media and Sinch AB go up and down completely randomly.

Pair Corralation between Media and Sinch AB

Assuming the 90 days trading horizon Media is expected to generate 6.6 times less return on investment than Sinch AB. In addition to that, Media is 1.16 times more volatile than Sinch AB. It trades about 0.0 of its total potential returns per unit of risk. Sinch AB is currently generating about 0.03 per unit of volatility. If you would invest  2,073  in Sinch AB on December 30, 2024 and sell it today you would earn a total of  76.00  from holding Sinch AB or generate 3.67% return on investment over 90 days.

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

Media and Games  vs.  Sinch AB

Media and Games

Risk-Adjusted Performance

Very Weak

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

Sinch AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinch AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sinch AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Media and Sinch AB

The main advantage of trading using opposite Media and Sinch AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media 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 Media and Games 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.