Correlation Between USWE Sports and Sprint Bioscience

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

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

Diversification Opportunities for USWE Sports and Sprint Bioscience

0.31

Correlation Coefficient

USWE Sports  Sprint Bioscience

Weak diversification

The 3 months correlation between USWE and Sprint is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding USWE Sports AB and Sprint Bioscience AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprint Bioscience and USWE Sports 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 USWE Sports AB are associated (or correlated) with Sprint Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprint Bioscience has no effect on the direction of USWE Sports i.e., USWE Sports and Sprint Bioscience go up and down completely randomly.

Pair Corralation between USWE Sports and Sprint Bioscience

Assuming the 90 days trading horizon USWE Sports AB is expected to generate 0.67 times more return on investment than Sprint Bioscience. However, USWE Sports AB is 1.48 times less risky than Sprint Bioscience. It trades about 0.14 of its potential returns per unit of risk. Sprint Bioscience AB is currently generating about 0.05 per unit of risk. If you would invest  710.00  in USWE Sports AB on October 5, 2024 and sell it today you would earn a total of  200.00  from holding USWE Sports AB or generate 28.17% return on investment over 90 days.

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

USWE Sports AB  vs.  Sprint Bioscience AB

USWE Sports AB

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days USWE Sports AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, USWE Sports unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with USWE Sports and Sprint Bioscience

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

The idea behind USWE Sports AB and Sprint Bioscience 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.