Correlation Between London Security and Spire Healthcare
Can any of the company-specific risk be diversified away by investing in both London Security and Spire Healthcare 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 London Security and Spire Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Spire Healthcare Group, you can compare the effects of market volatilities on London Security and Spire Healthcare 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 London Security with a short position of Spire Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Spire Healthcare.
Diversification Opportunities for London Security and Spire Healthcare
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between London and Spire is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and Spire Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Healthcare and London Security 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 London Security Plc are associated (or correlated) with Spire Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Healthcare has no effect on the direction of London Security i.e., London Security and Spire Healthcare go up and down completely randomly.
Pair Corralation between London Security and Spire Healthcare
Assuming the 90 days trading horizon London Security Plc is expected to generate 0.81 times more return on investment than Spire Healthcare. However, London Security Plc is 1.23 times less risky than Spire Healthcare. It trades about 0.05 of its potential returns per unit of risk. Spire Healthcare Group is currently generating about 0.01 per unit of risk. If you would invest 294,207 in London Security Plc on September 4, 2024 and sell it today you would earn a total of 30,793 from holding London Security Plc or generate 10.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
London Security Plc vs. Spire Healthcare Group
Performance |
| Timeline |
| London Security Plc |
| Spire Healthcare |
London Security and Spire Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Spire Healthcare
The main advantage of trading using opposite London Security and Spire Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security position performs unexpectedly, Spire Healthcare 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 Spire Healthcare will offset losses from the drop in Spire Healthcare's long position.| London Security vs. TR Property Investment | London Security vs. Auto Trader Group | London Security vs. New Residential Investment | London Security vs. Taylor Maritime Investments |
| Spire Healthcare vs. Uniper SE | Spire Healthcare vs. Mulberry Group PLC | Spire Healthcare vs. London Security Plc | Spire Healthcare vs. Triad Group PLC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |