Correlation Between Swvl Holdings and MicroStrategy Incorporated

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

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

Diversification Opportunities for Swvl Holdings and MicroStrategy Incorporated

0.48

Correlation Coefficient

Swvl Holdings  MicroStrategy Incorporated

Very weak diversification

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

Pair Corralation between Swvl Holdings and MicroStrategy Incorporated

Assuming the 90 days horizon Swvl Holdings is expected to generate 4.39 times less return on investment than MicroStrategy Incorporated. In addition to that, Swvl Holdings is 1.19 times more volatile than MicroStrategy Incorporated. It trades about 0.05 of its total potential returns per unit of risk. MicroStrategy Incorporated is currently generating about 0.28 per unit of volatility. If you would invest  14,147  in MicroStrategy Incorporated on September 13, 2024 and sell it today you would earn a total of  26,993  from holding MicroStrategy Incorporated or generate 190.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.06%
Values	Daily Returns

Swvl Holdings Corp  vs.  MicroStrategy Incorporated

Swvl Holdings Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Swvl Holdings Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Swvl Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

MicroStrategy Incorporated

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, MicroStrategy Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Swvl Holdings and MicroStrategy Incorporated

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

The idea behind Swvl Holdings Corp and MicroStrategy Incorporated 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.