Correlation Between Spirent Communications and AfriTin Mining
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and AfriTin Mining 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 AfriTin Mining 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 AfriTin Mining, you can compare the effects of market volatilities on Spirent Communications and AfriTin Mining 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 AfriTin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and AfriTin Mining.
Diversification Opportunities for Spirent Communications and AfriTin Mining
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spirent and AfriTin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and AfriTin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfriTin Mining 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 AfriTin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfriTin Mining has no effect on the direction of Spirent Communications i.e., Spirent Communications and AfriTin Mining go up and down completely randomly.
Pair Corralation between Spirent Communications and AfriTin Mining
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 0.14 times more return on investment than AfriTin Mining. However, Spirent Communications plc is 7.02 times less risky than AfriTin Mining. It trades about 0.05 of its potential returns per unit of risk. AfriTin Mining is currently generating about -0.02 per unit of risk. If you would invest 16,980 in Spirent Communications plc on September 2, 2024 and sell it today you would earn a total of 150.00 from holding Spirent Communications plc or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. AfriTin Mining
Performance |
| Timeline |
| Spirent Communications |
| AfriTin Mining |
Spirent Communications and AfriTin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and AfriTin Mining
The main advantage of trading using opposite Spirent Communications and AfriTin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, AfriTin Mining 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 AfriTin Mining will offset losses from the drop in AfriTin Mining's long position.| Spirent Communications vs. Samsung Electronics Co | Spirent Communications vs. Samsung Electronics Co | Spirent Communications vs. Hyundai Motor | Spirent Communications vs. Toyota Motor Corp |
| AfriTin Mining vs. PureTech Health plc | AfriTin Mining vs. Schweiter Technologies AG | AfriTin Mining vs. Aeorema Communications Plc | AfriTin Mining vs. Roper Technologies |
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.
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