Correlation Between Sinch AB and Zignsec AB

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

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

Diversification Opportunities for Sinch AB and Zignsec AB

-0.48

Correlation Coefficient

Sinch AB  Zignsec AB

Very good diversification

The 3 months correlation between Sinch and Zignsec is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sinch AB and Zignsec AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zignsec 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 Zignsec AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zignsec AB has no effect on the direction of Sinch AB i.e., Sinch AB and Zignsec AB go up and down completely randomly.

Pair Corralation between Sinch AB and Zignsec AB

Assuming the 90 days trading horizon Sinch AB is expected to under-perform the Zignsec AB. But the stock apears to be less risky and, when comparing its historical volatility, Sinch AB is 2.62 times less risky than Zignsec AB. The stock trades about -0.1 of its potential returns per unit of risk. The Zignsec AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Zignsec AB on September 3, 2024 and sell it today you would earn a total of  72.00  from holding Zignsec AB or generate 112.5% return on investment over 90 days.

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

Sinch AB  vs.  Zignsec AB

Sinch AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinch AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Zignsec AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zignsec AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zignsec AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sinch AB and Zignsec AB

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

The idea behind Sinch AB and Zignsec 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.