Correlation Between Spirit Telecom and Argo Investments
Can any of the company-specific risk be diversified away by investing in both Spirit Telecom and Argo Investments 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 Spirit Telecom and Argo Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirit Telecom and Argo Investments, you can compare the effects of market volatilities on Spirit Telecom and Argo Investments 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 Spirit Telecom with a short position of Argo Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Telecom and Argo Investments.
Diversification Opportunities for Spirit Telecom and Argo Investments
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Spirit and Argo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Telecom and Argo Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Investments and Spirit Telecom 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 Spirit Telecom are associated (or correlated) with Argo Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Investments has no effect on the direction of Spirit Telecom i.e., Spirit Telecom and Argo Investments go up and down completely randomly.
Pair Corralation between Spirit Telecom and Argo Investments
Assuming the 90 days trading horizon Spirit Telecom is expected to generate 8.09 times more return on investment than Argo Investments. However, Spirit Telecom is 8.09 times more volatile than Argo Investments. It trades about 0.01 of its potential returns per unit of risk. Argo Investments is currently generating about 0.02 per unit of risk. If you would invest 66.00 in Spirit Telecom on November 9, 2024 and sell it today you would lose (11.00) from holding Spirit Telecom or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirit Telecom vs. Argo Investments
Performance |
| Timeline |
| Spirit Telecom |
| Argo Investments |
Spirit Telecom and Argo Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirit Telecom and Argo Investments
The main advantage of trading using opposite Spirit Telecom and Argo Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Telecom position performs unexpectedly, Argo Investments 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 Argo Investments will offset losses from the drop in Argo Investments' long position.| Spirit Telecom vs. WiseTech Global Limited | Spirit Telecom vs. Neurotech International | Spirit Telecom vs. Energy Technologies Limited | Spirit Telecom vs. Hansen Technologies |
| Argo Investments vs. Aneka Tambang Tbk | Argo Investments vs. Macquarie Group | Argo Investments vs. Commonwealth Bank | Argo Investments vs. Commonwealth Bank of |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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