Correlation Between Spark Power and Astra Energy

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

By analyzing existing cross correlation between Spark Power Group and Astra Energy, you can compare the effects of market volatilities on Spark Power and Astra Energy 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 Spark Power with a short position of Astra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spark Power and Astra Energy.

Diversification Opportunities for Spark Power and Astra Energy

0.71

Correlation Coefficient

Spark Power  Astra Energy

Poor diversification

The 3 months correlation between Spark and Astra is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Spark Power Group and Astra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Energy and Spark Power 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 Spark Power Group are associated (or correlated) with Astra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Energy has no effect on the direction of Spark Power i.e., Spark Power and Astra Energy go up and down completely randomly.

Pair Corralation between Spark Power and Astra Energy

If you would invest  12.00  in Astra Energy on September 3, 2024 and sell it today you would lose (1.00) from holding Astra Energy or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.54%
Values	Daily Returns

Spark Power Group  vs.  Astra Energy

Spark Power Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spark Power Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Spark Power is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Astra Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Astra Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Spark Power and Astra Energy

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

The idea behind Spark Power Group and Astra Energy 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..