Correlation Between 29Metals and Spirit Telecom

Can any of the company-specific risk be diversified away by investing in both 29Metals and Spirit Telecom 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 29Metals and Spirit Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 29Metals and Spirit Telecom, you can compare the effects of market volatilities on 29Metals and Spirit Telecom 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 29Metals with a short position of Spirit Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of 29Metals and Spirit Telecom.

Diversification Opportunities for 29Metals and Spirit Telecom

0.11

Correlation Coefficient

29Metals  Spirit Telecom

Average diversification

The 3 months correlation between 29Metals and Spirit is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding 29Metals and Spirit Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Telecom and 29Metals 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 29Metals are associated (or correlated) with Spirit Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Telecom has no effect on the direction of 29Metals i.e., 29Metals and Spirit Telecom go up and down completely randomly.

Pair Corralation between 29Metals and Spirit Telecom

Assuming the 90 days trading horizon 29Metals is expected to generate 1.38 times less return on investment than Spirit Telecom. In addition to that, 29Metals is 1.27 times more volatile than Spirit Telecom. It trades about 0.03 of its total potential returns per unit of risk. Spirit Telecom is currently generating about 0.06 per unit of volatility. If you would invest  5.60  in Spirit Telecom on September 2, 2024 and sell it today you would earn a total of  0.60  from holding Spirit Telecom or generate 10.71% return on investment over 90 days.

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

29Metals  vs.  Spirit Telecom

29Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 29Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, 29Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Spirit Telecom

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spirit Telecom are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Spirit Telecom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 29Metals and Spirit Telecom

The main advantage of trading using opposite 29Metals and Spirit Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 29Metals position performs unexpectedly, Spirit Telecom 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 Spirit Telecom will offset losses from the drop in Spirit Telecom's long position.

The idea behind 29Metals and Spirit Telecom 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.