Correlation Between Leons Furniture and Sparx Technology
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and Sparx Technology 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 Leons Furniture and Sparx Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leons Furniture Limited and Sparx Technology, you can compare the effects of market volatilities on Leons Furniture and Sparx Technology 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 Leons Furniture with a short position of Sparx Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Sparx Technology.
Diversification Opportunities for Leons Furniture and Sparx Technology
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leons and Sparx is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology and Leons Furniture 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 Leons Furniture Limited are associated (or correlated) with Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of Leons Furniture i.e., Leons Furniture and Sparx Technology go up and down completely randomly.
Pair Corralation between Leons Furniture and Sparx Technology
Assuming the 90 days trading horizon Leons Furniture is expected to generate 17.28 times less return on investment than Sparx Technology. But when comparing it to its historical volatility, Leons Furniture Limited is 22.15 times less risky than Sparx Technology. It trades about 0.06 of its potential returns per unit of risk. Sparx Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.50 in Sparx Technology on August 30, 2024 and sell it today you would earn a total of 2,588 from holding Sparx Technology or generate 57500.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Leons Furniture Limited vs. Sparx Technology
Performance |
| Timeline |
| Leons Furniture |
| Sparx Technology |
Leons Furniture and Sparx Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Sparx Technology
The main advantage of trading using opposite Leons Furniture and Sparx Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, Sparx Technology 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 Sparx Technology will offset losses from the drop in Sparx Technology's long position.| Leons Furniture vs. Eros Resources Corp | Leons Furniture vs. Apple Inc CDR | Leons Furniture vs. European Residential Real | Leons Furniture vs. Canadian Utilities Ltd |
| Sparx Technology vs. Precious Metals And | Sparx Technology vs. NextSource Materials | Sparx Technology vs. Quisitive Technology Solutions | Sparx Technology vs. Champion Iron |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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