Correlation Between Spirent Communications and CHINA SHENHUA
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and CHINA SHENHUA 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 Spirent Communications and CHINA SHENHUA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and CHINA SHENHUA ENA, you can compare the effects of market volatilities on Spirent Communications and CHINA SHENHUA 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 Spirent Communications with a short position of CHINA SHENHUA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and CHINA SHENHUA.
Diversification Opportunities for Spirent Communications and CHINA SHENHUA
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Spirent and CHINA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and CHINA SHENHUA ENA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA SHENHUA ENA and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with CHINA SHENHUA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA SHENHUA ENA has no effect on the direction of Spirent Communications i.e., Spirent Communications and CHINA SHENHUA go up and down completely randomly.
Pair Corralation between Spirent Communications and CHINA SHENHUA
Assuming the 90 days horizon Spirent Communications plc is expected to generate 0.64 times more return on investment than CHINA SHENHUA. However, Spirent Communications plc is 1.56 times less risky than CHINA SHENHUA. It trades about 0.11 of its potential returns per unit of risk. CHINA SHENHUA ENA is currently generating about 0.07 per unit of risk. If you would invest 206.00 in Spirent Communications plc on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Spirent Communications plc or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Spirent Communications plc vs. CHINA SHENHUA ENA
Performance |
| Timeline |
| Spirent Communications |
| CHINA SHENHUA ENA |
Spirent Communications and CHINA SHENHUA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and CHINA SHENHUA
The main advantage of trading using opposite Spirent Communications and CHINA SHENHUA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, CHINA SHENHUA 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 CHINA SHENHUA will offset losses from the drop in CHINA SHENHUA's long position.| Spirent Communications vs. Superior Plus Corp | Spirent Communications vs. SIVERS SEMICONDUCTORS AB | Spirent Communications vs. Norsk Hydro ASA | Spirent Communications vs. Reliance Steel Aluminum |
| CHINA SHENHUA vs. Spirent Communications plc | CHINA SHENHUA vs. ASURE SOFTWARE | CHINA SHENHUA vs. Alfa Financial Software | CHINA SHENHUA vs. UPDATE SOFTWARE |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |