Correlation Between Sprint Bioscience and Lidds AB

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

Diversification Opportunities for Sprint Bioscience and Lidds AB

0.25

Correlation Coefficient

Sprint Bioscience  Lidds AB

Modest diversification

The 3 months correlation between Sprint and Lidds is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sprint Bioscience AB and Lidds AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lidds 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 Lidds AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lidds AB has no effect on the direction of Sprint Bioscience i.e., Sprint Bioscience and Lidds AB go up and down completely randomly.

Pair Corralation between Sprint Bioscience and Lidds AB

Assuming the 90 days trading horizon Sprint Bioscience AB is expected to under-perform the Lidds AB. But the stock apears to be less risky and, when comparing its historical volatility, Sprint Bioscience AB is 1.94 times less risky than Lidds AB. The stock trades about -0.19 of its potential returns per unit of risk. The Lidds AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Lidds AB on December 22, 2024 and sell it today you would earn a total of  4.00  from holding Lidds AB or generate 40.0% return on investment over 90 days.

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

Sprint Bioscience AB  vs.  Lidds AB

Sprint Bioscience

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprint Bioscience AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lidds AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lidds AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Lidds AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprint Bioscience and Lidds AB

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

The idea behind Sprint Bioscience AB and Lidds 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.