Correlation Between Spineguard and Implanet
Can any of the company-specific risk be diversified away by investing in both Spineguard and Implanet 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 Spineguard and Implanet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spineguard and Implanet SA, you can compare the effects of market volatilities on Spineguard and Implanet 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 Spineguard with a short position of Implanet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spineguard and Implanet.
Diversification Opportunities for Spineguard and Implanet
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spineguard and Implanet is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Spineguard and Implanet SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Implanet SA and Spineguard 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 Spineguard are associated (or correlated) with Implanet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Implanet SA has no effect on the direction of Spineguard i.e., Spineguard and Implanet go up and down completely randomly.
Pair Corralation between Spineguard and Implanet
Assuming the 90 days trading horizon Spineguard is expected to generate 25.98 times less return on investment than Implanet. But when comparing it to its historical volatility, Spineguard is 1.44 times less risky than Implanet. It trades about 0.0 of its potential returns per unit of risk. Implanet SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Implanet SA on September 1, 2024 and sell it today you would lose (5.00) from holding Implanet SA or give up 29.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spineguard vs. Implanet SA
Performance |
| Timeline |
| Spineguard |
| Implanet SA |
Spineguard and Implanet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spineguard and Implanet
The main advantage of trading using opposite Spineguard and Implanet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spineguard position performs unexpectedly, Implanet 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 Implanet will offset losses from the drop in Implanet's long position.The idea behind Spineguard and Implanet SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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