Correlation Between Spire Healthcare and Made Tech

Can any of the company-specific risk be diversified away by investing in both Spire Healthcare and Made Tech 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 Made Tech 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 Made Tech Group, you can compare the effects of market volatilities on Spire Healthcare and Made Tech 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 Made Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Healthcare and Made Tech.

Diversification Opportunities for Spire Healthcare and Made Tech

-0.36

Correlation Coefficient

Spire Healthcare  Made Tech

Very good diversification

The 3 months correlation between Spire and Made is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Made Tech Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Made Tech Group 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 Made Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Made Tech Group has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Made Tech go up and down completely randomly.

Pair Corralation between Spire Healthcare and Made Tech

Assuming the 90 days trading horizon Spire Healthcare Group is expected to under-perform the Made Tech. But the stock apears to be less risky and, when comparing its historical volatility, Spire Healthcare Group is 3.15 times less risky than Made Tech. The stock trades about -0.05 of its potential returns per unit of risk. The Made Tech Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,525  in Made Tech Group on September 29, 2024 and sell it today you would earn a total of  975.00  from holding Made Tech Group or generate 63.93% return on investment over 90 days.

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

Spire Healthcare Group  vs.  Made Tech Group

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 rather sound technical and fundamental indicators, Spire Healthcare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Made Tech Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Made Tech Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Made Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spire Healthcare and Made Tech

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

The idea behind Spire Healthcare Group and Made Tech Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.