Correlation Between Profound Medical and Sparx Technology
Can any of the company-specific risk be diversified away by investing in both Profound Medical 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 Profound Medical and Sparx Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profound Medical Corp and Sparx Technology, you can compare the effects of market volatilities on Profound Medical 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 Profound Medical with a short position of Sparx Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profound Medical and Sparx Technology.
Diversification Opportunities for Profound Medical and Sparx Technology
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Profound and Sparx is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology and Profound Medical 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 Profound Medical Corp 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 Profound Medical i.e., Profound Medical and Sparx Technology go up and down completely randomly.
Pair Corralation between Profound Medical and Sparx Technology
Assuming the 90 days trading horizon Profound Medical is expected to generate 92.47 times less return on investment than Sparx Technology. But when comparing it to its historical volatility, Profound Medical Corp is 13.03 times less risky than Sparx Technology. It trades about 0.01 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 2.50 in Sparx Technology on November 27, 2024 and sell it today you would earn a total of 2,604 from holding Sparx Technology or generate 104180.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Profound Medical Corp vs. Sparx Technology
Performance |
| Timeline |
| Profound Medical Corp |
| Sparx Technology |
Profound Medical and Sparx Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profound Medical and Sparx Technology
The main advantage of trading using opposite Profound Medical and Sparx Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profound Medical 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.| Profound Medical vs. HLS Therapeutics | Profound Medical vs. Medicenna Therapeutics Corp | Profound Medical vs. Aptose Biosciences |
| Sparx Technology vs. TGS Esports | Sparx Technology vs. Maple Leaf Foods | Sparx Technology vs. Atrium Mortgage Investment | Sparx Technology vs. Flow Beverage Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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