Correlation Between Sinch AB and Bravida Holding

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

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

Diversification Opportunities for Sinch AB and Bravida Holding

0.78

Correlation Coefficient

Sinch AB  Bravida Holding

Poor diversification

The 3 months correlation between Sinch and Bravida is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sinch AB and Bravida Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravida Holding AB and Sinch 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 Sinch AB are associated (or correlated) with Bravida Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravida Holding AB has no effect on the direction of Sinch AB i.e., Sinch AB and Bravida Holding go up and down completely randomly.

Pair Corralation between Sinch AB and Bravida Holding

Assuming the 90 days trading horizon Sinch AB is expected to generate 2.54 times less return on investment than Bravida Holding. In addition to that, Sinch AB is 2.83 times more volatile than Bravida Holding AB. It trades about 0.03 of its total potential returns per unit of risk. Bravida Holding AB is currently generating about 0.19 per unit of volatility. If you would invest  8,050  in Bravida Holding AB on December 31, 2024 and sell it today you would earn a total of  1,150  from holding Bravida Holding AB or generate 14.29% return on investment over 90 days.

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

Sinch AB  vs.  Bravida Holding AB

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 stable basic indicators, Sinch AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bravida Holding AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bravida Holding AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bravida Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sinch AB and Bravida Holding

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

The idea behind Sinch AB and Bravida Holding 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.