Correlation Between Spirent Communications and Batm Advanced
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Batm Advanced 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 Batm Advanced 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 Batm Advanced Communications, you can compare the effects of market volatilities on Spirent Communications and Batm Advanced 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 Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Batm Advanced.
Diversification Opportunities for Spirent Communications and Batm Advanced
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Spirent and Batm is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun 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 Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Spirent Communications i.e., Spirent Communications and Batm Advanced go up and down completely randomly.
Pair Corralation between Spirent Communications and Batm Advanced
Assuming the 90 days trading horizon Spirent Communications is expected to generate 5.53 times less return on investment than Batm Advanced. But when comparing it to its historical volatility, Spirent Communications plc is 3.29 times less risky than Batm Advanced. It trades about 0.08 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,800 in Batm Advanced Communications on August 28, 2024 and sell it today you would earn a total of 130.00 from holding Batm Advanced Communications or generate 7.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Batm Advanced Communications
Performance |
| Timeline |
| Spirent Communications |
| Batm Advanced Commun |
Spirent Communications and Batm Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Batm Advanced
The main advantage of trading using opposite Spirent Communications and Batm Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Batm Advanced 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 Batm Advanced will offset losses from the drop in Batm Advanced's long position.| Spirent Communications vs. Quadrise Plc | Spirent Communications vs. ImmuPharma PLC | Spirent Communications vs. Intuitive Investments Group | Spirent Communications vs. European Metals Holdings |
| Batm Advanced vs. Silvercorp Metals | Batm Advanced vs. GreenX Metals | Batm Advanced vs. Jacquet Metal Service | Batm Advanced vs. Cizzle Biotechnology Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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