Correlation Between Sparx Technology and Sabio Holdings

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

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

Diversification Opportunities for Sparx Technology and Sabio Holdings

0.0

Correlation Coefficient

Sparx Technology  Sabio Holdings

Pay attention - limited upside

The 3 months correlation between Sparx and Sabio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sparx Technology and Sabio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabio Holdings and Sparx Technology 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 Sparx Technology are associated (or correlated) with Sabio Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabio Holdings has no effect on the direction of Sparx Technology i.e., Sparx Technology and Sabio Holdings go up and down completely randomly.

Pair Corralation between Sparx Technology and Sabio Holdings

Assuming the 90 days trading horizon Sparx Technology is expected to generate 7.88 times more return on investment than Sabio Holdings. However, Sparx Technology is 7.88 times more volatile than Sabio Holdings. It trades about 0.05 of its potential returns per unit of risk. Sabio Holdings is currently generating about 0.01 per unit of risk. If you would invest  4.50  in Sparx Technology on October 22, 2024 and sell it today you would earn a total of  2,824  from holding Sparx Technology or generate 62766.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sparx Technology  vs.  Sabio Holdings

Sparx Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Sabio Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabio Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Sabio Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sparx Technology and Sabio Holdings

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

The idea behind Sparx Technology and Sabio Holdings 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.