Correlation Between Sabio Holdings and Tinybeans Group

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

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

Diversification Opportunities for Sabio Holdings and Tinybeans Group

0.22

Correlation Coefficient

Sabio Holdings  Tinybeans Group

Modest diversification

The 3 months correlation between Sabio and Tinybeans is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sabio Holdings and Tinybeans Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinybeans Group and Sabio Holdings 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 Sabio Holdings are associated (or correlated) with Tinybeans Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinybeans Group has no effect on the direction of Sabio Holdings i.e., Sabio Holdings and Tinybeans Group go up and down completely randomly.

Pair Corralation between Sabio Holdings and Tinybeans Group

Assuming the 90 days horizon Sabio Holdings is expected to generate 6.45 times less return on investment than Tinybeans Group. But when comparing it to its historical volatility, Sabio Holdings is 7.78 times less risky than Tinybeans Group. It trades about 0.11 of its potential returns per unit of risk. Tinybeans Group Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Tinybeans Group Limited on August 31, 2024 and sell it today you would lose (0.50) from holding Tinybeans Group Limited or give up 50.0% of portfolio value over 90 days.

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

Sabio Holdings  vs.  Tinybeans Group Limited

Sabio Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sabio Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sabio Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Tinybeans Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tinybeans Group Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tinybeans Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sabio Holdings and Tinybeans Group

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

The idea behind Sabio Holdings and Tinybeans Group Limited 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.