Correlation Between Sabio Holdings and Sparx Technology

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

By analyzing existing cross correlation between Sabio Holdings and Sparx Technology, you can compare the effects of market volatilities on Sabio Holdings and Sparx Technology 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 Sparx Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabio Holdings and Sparx Technology.

Diversification Opportunities for Sabio Holdings and Sparx Technology

-0.7

Correlation Coefficient

Sabio Holdings  Sparx Technology

Excellent diversification

The 3 months correlation between Sabio and Sparx is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sabio Holdings and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology 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 Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of Sabio Holdings i.e., Sabio Holdings and Sparx Technology go up and down completely randomly.

Pair Corralation between Sabio Holdings and Sparx Technology

Assuming the 90 days trading horizon Sabio Holdings is expected to generate 1.35 times more return on investment than Sparx Technology. However, Sabio Holdings is 1.35 times more volatile than Sparx Technology. It trades about 0.1 of its potential returns per unit of risk. Sparx Technology is currently generating about -0.11 per unit of risk. If you would invest  50.00  in Sabio Holdings on December 21, 2024 and sell it today you would earn a total of  13.00  from holding Sabio Holdings or generate 26.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Sabio Holdings  vs.  Sparx Technology

Sabio Holdings

Risk-Adjusted Performance

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. In spite of fairly uncertain forward indicators, Sabio Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Sparx Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparx Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Sabio Holdings and Sparx Technology

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

The idea behind Sabio Holdings and Sparx Technology 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.