Correlation Between BASE and Swvl Holdings

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

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

Diversification Opportunities for BASE and Swvl Holdings

0.17

Correlation Coefficient

BASE  Swvl Holdings

Average diversification

The 3 months correlation between BASE and Swvl is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Swvl Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swvl Holdings Corp and BASE 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 BASE Inc are associated (or correlated) with Swvl Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swvl Holdings Corp has no effect on the direction of BASE i.e., BASE and Swvl Holdings go up and down completely randomly.

Pair Corralation between BASE and Swvl Holdings

Assuming the 90 days horizon BASE is expected to generate 4.18 times less return on investment than Swvl Holdings. But when comparing it to its historical volatility, BASE Inc is 1.23 times less risky than Swvl Holdings. It trades about 0.06 of its potential returns per unit of risk. Swvl Holdings Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  286.00  in Swvl Holdings Corp on September 26, 2024 and sell it today you would earn a total of  346.00  from holding Swvl Holdings Corp or generate 120.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

BASE Inc  vs.  Swvl Holdings Corp

BASE Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

Swvl Holdings Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Swvl Holdings Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Swvl Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BASE and Swvl Holdings

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

The idea behind BASE Inc and Swvl Holdings Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.