Correlation Between SPORTING and Indutrade

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

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

Diversification Opportunities for SPORTING and Indutrade

0.47

Correlation Coefficient

SPORTING  Indutrade

Very weak diversification

The 3 months correlation between SPORTING and Indutrade is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SPORTING and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and SPORTING 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 SPORTING are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of SPORTING i.e., SPORTING and Indutrade go up and down completely randomly.

Pair Corralation between SPORTING and Indutrade

Assuming the 90 days trading horizon SPORTING is expected to generate 1.95 times more return on investment than Indutrade. However, SPORTING is 1.95 times more volatile than Indutrade AB. It trades about -0.01 of its potential returns per unit of risk. Indutrade AB is currently generating about -0.07 per unit of risk. If you would invest  96.00  in SPORTING on April 20, 2025 and sell it today you would lose (5.00) from holding SPORTING or give up 5.21% of portfolio value over 90 days.

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

SPORTING  vs.  Indutrade AB

SPORTING

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPORTING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, SPORTING is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Indutrade AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SPORTING and Indutrade

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

The idea behind SPORTING and Indutrade 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.