Correlation Between Sprout Social and Oneconnect Financial

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

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

Diversification Opportunities for Sprout Social and Oneconnect Financial

0.05

Correlation Coefficient

Sprout Social  Oneconnect Financial

Significant diversification

The 3 months correlation between Sprout and Oneconnect is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sprout Social and Oneconnect Financial Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oneconnect Financial and Sprout Social 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 Sprout Social are associated (or correlated) with Oneconnect Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oneconnect Financial has no effect on the direction of Sprout Social i.e., Sprout Social and Oneconnect Financial go up and down completely randomly.

Pair Corralation between Sprout Social and Oneconnect Financial

Considering the 90-day investment horizon Sprout Social is expected to generate 5.05 times less return on investment than Oneconnect Financial. But when comparing it to its historical volatility, Sprout Social is 3.92 times less risky than Oneconnect Financial. It trades about 0.11 of its potential returns per unit of risk. Oneconnect Financial Technology is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  129.00  in Oneconnect Financial Technology on September 19, 2024 and sell it today you would earn a total of  116.00  from holding Oneconnect Financial Technology or generate 89.92% return on investment over 90 days.

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

Sprout Social  vs.  Oneconnect Financial Technolog

Sprout Social

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprout Social are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Sprout Social unveiled solid returns over the last few months and may actually be approaching a breakup point.

Oneconnect Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oneconnect Financial Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Oneconnect Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprout Social and Oneconnect Financial

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

The idea behind Sprout Social and Oneconnect Financial Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.