Correlation Between SPARTAN STORES and HMS Bergbau

Can any of the company-specific risk be diversified away by investing in both SPARTAN STORES and HMS Bergbau 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 SPARTAN STORES and HMS Bergbau into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPARTAN STORES and HMS Bergbau AG, you can compare the effects of market volatilities on SPARTAN STORES and HMS Bergbau 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 SPARTAN STORES with a short position of HMS Bergbau. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPARTAN STORES and HMS Bergbau.

Diversification Opportunities for SPARTAN STORES and HMS Bergbau

-0.43

Correlation Coefficient

SPARTAN STORES  HMS Bergbau

Very good diversification

The 3 months correlation between SPARTAN and HMS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and HMS Bergbau AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMS Bergbau AG and SPARTAN STORES 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 SPARTAN STORES are associated (or correlated) with HMS Bergbau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMS Bergbau AG has no effect on the direction of SPARTAN STORES i.e., SPARTAN STORES and HMS Bergbau go up and down completely randomly.

Pair Corralation between SPARTAN STORES and HMS Bergbau

Assuming the 90 days trading horizon SPARTAN STORES is expected to under-perform the HMS Bergbau. In addition to that, SPARTAN STORES is 1.92 times more volatile than HMS Bergbau AG. It trades about -0.02 of its total potential returns per unit of risk. HMS Bergbau AG is currently generating about 0.16 per unit of volatility. If you would invest  2,600  in HMS Bergbau AG on September 26, 2024 and sell it today you would earn a total of  340.00  from holding HMS Bergbau AG or generate 13.08% return on investment over 90 days.

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

SPARTAN STORES  vs.  HMS Bergbau AG

SPARTAN STORES

Risk-Adjusted Performance

0 of 100

Very Weak

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

HMS Bergbau AG

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HMS Bergbau AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, HMS Bergbau may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SPARTAN STORES and HMS Bergbau

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

The idea behind SPARTAN STORES and HMS Bergbau AG 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.