Correlation Between Sprint Bioscience and IZafe Group

Can any of the company-specific risk be diversified away by investing in both Sprint Bioscience and IZafe 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 Sprint Bioscience and IZafe Group 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 iZafe Group AB, you can compare the effects of market volatilities on Sprint Bioscience and IZafe 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 Sprint Bioscience with a short position of IZafe Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprint Bioscience and IZafe Group.

Diversification Opportunities for Sprint Bioscience and IZafe Group

0.4

Correlation Coefficient

Sprint Bioscience  IZafe Group

Very weak diversification

The 3 months correlation between Sprint and IZafe is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sprint Bioscience AB and iZafe Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iZafe Group 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 IZafe Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iZafe Group AB has no effect on the direction of Sprint Bioscience i.e., Sprint Bioscience and IZafe Group go up and down completely randomly.

Pair Corralation between Sprint Bioscience and IZafe Group

Assuming the 90 days trading horizon Sprint Bioscience AB is expected to generate 0.96 times more return on investment than IZafe Group. However, Sprint Bioscience AB is 1.04 times less risky than IZafe Group. It trades about 0.11 of its potential returns per unit of risk. iZafe Group AB is currently generating about 0.04 per unit of risk. If you would invest  130.00  in Sprint Bioscience AB on September 5, 2024 and sell it today you would earn a total of  44.00  from holding Sprint Bioscience AB or generate 33.85% return on investment over 90 days.

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

Sprint Bioscience AB  vs.  iZafe Group AB

Sprint Bioscience

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprint Bioscience AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Sprint Bioscience sustained solid returns over the last few months and may actually be approaching a breakup point.

iZafe Group AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iZafe Group AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, IZafe Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprint Bioscience and IZafe Group

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

The idea behind Sprint Bioscience AB and iZafe Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.