Correlation Between Spire Healthcare and Gaming Realms

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

By analyzing existing cross correlation between Spire Healthcare Group and Gaming Realms plc, you can compare the effects of market volatilities on Spire Healthcare and Gaming Realms 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 Spire Healthcare with a short position of Gaming Realms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Healthcare and Gaming Realms.

Diversification Opportunities for Spire Healthcare and Gaming Realms

0.25

Correlation Coefficient

Spire Healthcare  Gaming Realms

Modest diversification

The 3 months correlation between Spire and Gaming is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Gaming Realms plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Realms plc and Spire Healthcare 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 Spire Healthcare Group are associated (or correlated) with Gaming Realms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Realms plc has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Gaming Realms go up and down completely randomly.

Pair Corralation between Spire Healthcare and Gaming Realms

Assuming the 90 days trading horizon Spire Healthcare is expected to generate 8.43 times less return on investment than Gaming Realms. But when comparing it to its historical volatility, Spire Healthcare Group is 2.07 times less risky than Gaming Realms. It trades about 0.01 of its potential returns per unit of risk. Gaming Realms plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,500  in Gaming Realms plc on September 13, 2024 and sell it today you would earn a total of  240.00  from holding Gaming Realms plc or generate 6.86% return on investment over 90 days.

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

Spire Healthcare Group  vs.  Gaming Realms plc

Spire Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spire Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Gaming Realms plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Spire Healthcare and Gaming Realms

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

The idea behind Spire Healthcare Group and Gaming Realms 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.