Correlation Between Spineguard and Bourse Direct

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

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

Diversification Opportunities for Spineguard and Bourse Direct

-0.52

Correlation Coefficient

Spineguard  Bourse Direct

Excellent diversification

The 3 months correlation between Spineguard and Bourse is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Spineguard and Bourse Direct SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bourse Direct SA and Spineguard 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 Spineguard are associated (or correlated) with Bourse Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bourse Direct SA has no effect on the direction of Spineguard i.e., Spineguard and Bourse Direct go up and down completely randomly.

Pair Corralation between Spineguard and Bourse Direct

Assuming the 90 days trading horizon Spineguard is expected to generate 5.08 times more return on investment than Bourse Direct. However, Spineguard is 5.08 times more volatile than Bourse Direct SA. It trades about 0.13 of its potential returns per unit of risk. Bourse Direct SA is currently generating about -0.17 per unit of risk. If you would invest  14.00  in Spineguard on September 5, 2024 and sell it today you would earn a total of  10.00  from holding Spineguard or generate 71.43% return on investment over 90 days.

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

Spineguard  vs.  Bourse Direct SA

Spineguard

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spineguard are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Spineguard reported solid returns over the last few months and may actually be approaching a breakup point.

Bourse Direct SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bourse Direct SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Spineguard and Bourse Direct

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

The idea behind Spineguard and Bourse Direct SA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.