Correlation Between Advtech and SPAR
Can any of the company-specific risk be diversified away by investing in both Advtech and SPAR 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 Advtech and SPAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advtech and SPAR Group, you can compare the effects of market volatilities on Advtech and SPAR 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 Advtech with a short position of SPAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advtech and SPAR.
Diversification Opportunities for Advtech and SPAR
Average diversification
The 3 months correlation between Advtech and SPAR is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Advtech and SPAR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAR Group and Advtech 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 Advtech are associated (or correlated) with SPAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAR Group has no effect on the direction of Advtech i.e., Advtech and SPAR go up and down completely randomly.
Pair Corralation between Advtech and SPAR
Assuming the 90 days trading horizon Advtech is expected to generate 1.01 times more return on investment than SPAR. However, Advtech is 1.01 times more volatile than SPAR Group. It trades about -0.04 of its potential returns per unit of risk. SPAR Group is currently generating about -0.15 per unit of risk. If you would invest 327,500 in Advtech on November 30, 2024 and sell it today you would lose (10,100) from holding Advtech or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advtech vs. SPAR Group
Performance |
| Timeline |
| Advtech |
| SPAR Group |
Advtech and SPAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advtech and SPAR
The main advantage of trading using opposite Advtech and SPAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advtech position performs unexpectedly, SPAR 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 SPAR will offset losses from the drop in SPAR's long position.| Advtech vs. RCL Foods | Advtech vs. ABSA Bank Limited | Advtech vs. Allied Electronics | Advtech vs. Astoria Investments |
| SPAR vs. Harmony Gold Mining | SPAR vs. Bytes Technology | SPAR vs. Brimstone Investment | SPAR vs. Deneb Investments |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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