Correlation Between Sparx Technology and Opus One

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

By analyzing existing cross correlation between Sparx Technology and Opus One Resources, you can compare the effects of market volatilities on Sparx Technology and Opus One 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 Sparx Technology with a short position of Opus One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparx Technology and Opus One.

Diversification Opportunities for Sparx Technology and Opus One

0.12

Correlation Coefficient

Sparx Technology  Opus One

Average diversification

The 3 months correlation between Sparx and Opus is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sparx Technology and Opus One Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opus One Resources and Sparx Technology 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 Sparx Technology are associated (or correlated) with Opus One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opus One Resources has no effect on the direction of Sparx Technology i.e., Sparx Technology and Opus One go up and down completely randomly.

Pair Corralation between Sparx Technology and Opus One

Assuming the 90 days trading horizon Sparx Technology is expected to generate 2.43 times more return on investment than Opus One. However, Sparx Technology is 2.43 times more volatile than Opus One Resources. It trades about 0.05 of its potential returns per unit of risk. Opus One Resources is currently generating about 0.09 per unit of risk. If you would invest  1.50  in Sparx Technology on September 26, 2024 and sell it today you would earn a total of  2,760  from holding Sparx Technology or generate 184033.33% return on investment over 90 days.

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

Sparx Technology  vs.  Opus One Resources

Sparx Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Opus One Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Opus One Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Opus One is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sparx Technology and Opus One

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

The idea behind Sparx Technology and Opus One Resources 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.