Correlation Between SCANDMEDICAL SOLDK-040 and Spirent Communications

Can any of the company-specific risk be diversified away by investing in both SCANDMEDICAL SOLDK-040 and Spirent Communications 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 SCANDMEDICAL SOLDK-040 and Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SCANDMEDICAL SOLDK 040 and Spirent Communications plc, you can compare the effects of market volatilities on SCANDMEDICAL SOLDK-040 and Spirent Communications 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 SCANDMEDICAL SOLDK-040 with a short position of Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANDMEDICAL SOLDK-040 and Spirent Communications.

Diversification Opportunities for SCANDMEDICAL SOLDK-040 and Spirent Communications

0.06

Correlation Coefficient

SCANDMEDICAL SOLDK-040  Spirent Communications

Significant diversification

The 3 months correlation between SCANDMEDICAL and Spirent is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding SCANDMEDICAL SOLDK 040 and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and SCANDMEDICAL SOLDK-040 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 SCANDMEDICAL SOLDK 040 are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of SCANDMEDICAL SOLDK-040 i.e., SCANDMEDICAL SOLDK-040 and Spirent Communications go up and down completely randomly.

Pair Corralation between SCANDMEDICAL SOLDK-040 and Spirent Communications

Assuming the 90 days horizon SCANDMEDICAL SOLDK 040 is expected to under-perform the Spirent Communications. In addition to that, SCANDMEDICAL SOLDK-040 is 2.98 times more volatile than Spirent Communications plc. It trades about -0.01 of its total potential returns per unit of risk. Spirent Communications plc is currently generating about -0.01 per unit of volatility. If you would invest  208.00  in Spirent Communications plc on September 2, 2024 and sell it today you would lose (2.00) from holding Spirent Communications plc or give up 0.96% of portfolio value over 90 days.

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

SCANDMEDICAL SOLDK 040  vs.  Spirent Communications plc

SCANDMEDICAL SOLDK 040

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCANDMEDICAL SOLDK 040 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SCANDMEDICAL SOLDK-040 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Spirent Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spirent Communications plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Spirent Communications is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SCANDMEDICAL SOLDK-040 and Spirent Communications

The main advantage of trading using opposite SCANDMEDICAL SOLDK-040 and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANDMEDICAL SOLDK-040 position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.

The idea behind SCANDMEDICAL SOLDK 040 and Spirent Communications 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.

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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.