Correlation Between SinterCast and GiG Software

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

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

Diversification Opportunities for SinterCast and GiG Software

0.96

Correlation Coefficient

SinterCast  GiG Software

Almost no diversification

The 3 months correlation between SinterCast and GiG is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SinterCast AB and GiG Software PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GiG Software PLC and SinterCast 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 SinterCast AB are associated (or correlated) with GiG Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GiG Software PLC has no effect on the direction of SinterCast i.e., SinterCast and GiG Software go up and down completely randomly.

Pair Corralation between SinterCast and GiG Software

Assuming the 90 days trading horizon SinterCast is expected to generate 3.75 times less return on investment than GiG Software. But when comparing it to its historical volatility, SinterCast AB is 2.46 times less risky than GiG Software. It trades about 0.15 of its potential returns per unit of risk. GiG Software PLC is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  435.00  in GiG Software PLC on April 25, 2025 and sell it today you would earn a total of  251.00  from holding GiG Software PLC or generate 57.7% return on investment over 90 days.

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

SinterCast AB  vs.  GiG Software PLC

SinterCast AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SinterCast AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SinterCast unveiled solid returns over the last few months and may actually be approaching a breakup point.

GiG Software PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GiG Software PLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, GiG Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SinterCast and GiG Software

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

The idea behind SinterCast AB and GiG Software PLC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.