Correlation Between Sprint Bioscience and Fabege AB

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

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

Diversification Opportunities for Sprint Bioscience and Fabege AB

-0.56

Correlation Coefficient

Sprint Bioscience  Fabege AB

Excellent diversification

The 3 months correlation between Sprint and Fabege is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sprint Bioscience AB and Fabege AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabege AB and Sprint Bioscience 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 Sprint Bioscience AB are associated (or correlated) with Fabege AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabege AB has no effect on the direction of Sprint Bioscience i.e., Sprint Bioscience and Fabege AB go up and down completely randomly.

Pair Corralation between Sprint Bioscience and Fabege AB

Assuming the 90 days trading horizon Sprint Bioscience AB is expected to generate 6.17 times more return on investment than Fabege AB. However, Sprint Bioscience is 6.17 times more volatile than Fabege AB. It trades about 0.05 of its potential returns per unit of risk. Fabege AB is currently generating about -0.01 per unit of risk. If you would invest  65.00  in Sprint Bioscience AB on October 5, 2024 and sell it today you would earn a total of  86.00  from holding Sprint Bioscience AB or generate 132.31% return on investment over 90 days.

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

Sprint Bioscience AB  vs.  Fabege AB

Sprint Bioscience

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Sprint Bioscience AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Sprint Bioscience sustained solid returns over the last few months and may actually be approaching a breakup point.

Fabege AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sprint Bioscience and Fabege AB

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

The idea behind Sprint Bioscience AB and Fabege 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.