Correlation Between Spirent Communications and Ocean Harvest
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Ocean Harvest 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 Ocean Harvest 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 Ocean Harvest Technology, you can compare the effects of market volatilities on Spirent Communications and Ocean Harvest 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 Ocean Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Ocean Harvest.
Diversification Opportunities for Spirent Communications and Ocean Harvest
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirent and Ocean is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Ocean Harvest Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Harvest Technology 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 Ocean Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Harvest Technology has no effect on the direction of Spirent Communications i.e., Spirent Communications and Ocean Harvest go up and down completely randomly.
Pair Corralation between Spirent Communications and Ocean Harvest
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 1.09 times more return on investment than Ocean Harvest. However, Spirent Communications is 1.09 times more volatile than Ocean Harvest Technology. It trades about 0.0 of its potential returns per unit of risk. Ocean Harvest Technology is currently generating about -0.04 per unit of risk. If you would invest 21,296 in Spirent Communications plc on October 16, 2024 and sell it today you would lose (4,046) from holding Spirent Communications plc or give up 19.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.14% |
| Values | Daily Returns |
Spirent Communications plc vs. Ocean Harvest Technology
Performance |
| Timeline |
| Spirent Communications |
| Ocean Harvest Technology |
Spirent Communications and Ocean Harvest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Ocean Harvest
The main advantage of trading using opposite Spirent Communications and Ocean Harvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Ocean Harvest 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 Ocean Harvest will offset losses from the drop in Ocean Harvest's long position.| Spirent Communications vs. Games Workshop Group | Spirent Communications vs. JB Hunt Transport | Spirent Communications vs. Trainline Plc | Spirent Communications vs. Norman Broadbent Plc |
| Ocean Harvest vs. Discover Financial Services | Ocean Harvest vs. Spirent Communications plc | Ocean Harvest vs. Batm Advanced Communications | Ocean Harvest vs. UNIQA Insurance Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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