Correlation Between G5 Entertainment and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and Spirent Communications 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 G5 Entertainment and Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G5 Entertainment AB and Spirent Communications plc, you can compare the effects of market volatilities on G5 Entertainment and Spirent Communications 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 G5 Entertainment with a short position of Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Spirent Communications.
Diversification Opportunities for G5 Entertainment and Spirent Communications
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 0QUS and Spirent is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment AB and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and G5 Entertainment 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 G5 Entertainment AB are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and Spirent Communications go up and down completely randomly.
Pair Corralation between G5 Entertainment and Spirent Communications
Assuming the 90 days trading horizon G5 Entertainment AB is expected to under-perform the Spirent Communications. But the stock apears to be less risky and, when comparing its historical volatility, G5 Entertainment AB is 1.4 times less risky than Spirent Communications. The stock trades about -0.04 of its potential returns per unit of risk. The Spirent Communications plc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 25,888 in Spirent Communications plc on August 25, 2024 and sell it today you would lose (8,788) from holding Spirent Communications plc or give up 33.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
G5 Entertainment AB vs. Spirent Communications plc
Performance |
| Timeline |
| G5 Entertainment |
| Spirent Communications |
G5 Entertainment and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G5 Entertainment and Spirent Communications
The main advantage of trading using opposite G5 Entertainment and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| G5 Entertainment vs. Samsung Electronics Co | G5 Entertainment vs. Samsung Electronics Co | G5 Entertainment vs. Hyundai Motor | G5 Entertainment vs. Toyota Motor Corp |
| Spirent Communications vs. Quadrise Plc | Spirent Communications vs. ImmuPharma PLC | Spirent Communications vs. Intuitive Investments Group | Spirent Communications vs. European Metals Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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