Correlation Between MAG Interactive and Sinch AB

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

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

Diversification Opportunities for MAG Interactive and Sinch AB

0.24

Correlation Coefficient

MAG Interactive  Sinch AB

Modest diversification

The 3 months correlation between MAG and Sinch is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding MAG Interactive AB and Sinch AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinch AB and MAG Interactive 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 MAG Interactive 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 MAG Interactive i.e., MAG Interactive and Sinch AB go up and down completely randomly.

Pair Corralation between MAG Interactive and Sinch AB

Assuming the 90 days trading horizon MAG Interactive AB is expected to generate 1.19 times more return on investment than Sinch AB. However, MAG Interactive is 1.19 times more volatile than Sinch AB. It trades about 0.09 of its potential returns per unit of risk. Sinch AB is currently generating about 0.1 per unit of risk. If you would invest  756.00  in MAG Interactive AB on December 4, 2024 and sell it today you would earn a total of  150.00  from holding MAG Interactive AB or generate 19.84% return on investment over 90 days.

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

MAG Interactive AB  vs.  Sinch AB

MAG Interactive AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Interactive AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MAG Interactive unveiled 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 7 (%) 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 MAG Interactive and Sinch AB

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

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.