Correlation Between Arista Power and Spirax Sarco

Can any of the company-specific risk be diversified away by investing in both Arista Power and Spirax Sarco 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 Arista Power and Spirax Sarco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arista Power and Spirax Sarco Engineering PLC, you can compare the effects of market volatilities on Arista Power and Spirax Sarco 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 Arista Power with a short position of Spirax Sarco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arista Power and Spirax Sarco.

Diversification Opportunities for Arista Power and Spirax Sarco

0.0

Correlation Coefficient

Arista Power  Spirax Sarco

Pay attention - limited upside

The 3 months correlation between Arista and Spirax is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arista Power and Spirax Sarco Engineering PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirax Sarco Enginee and Arista Power 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 Arista Power are associated (or correlated) with Spirax Sarco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirax Sarco Enginee has no effect on the direction of Arista Power i.e., Arista Power and Spirax Sarco go up and down completely randomly.

Pair Corralation between Arista Power and Spirax Sarco

Given the investment horizon of 90 days Arista Power is expected to generate 2.47 times more return on investment than Spirax Sarco. However, Arista Power is 2.47 times more volatile than Spirax Sarco Engineering PLC. It trades about 0.02 of its potential returns per unit of risk. Spirax Sarco Engineering PLC is currently generating about -0.04 per unit of risk. If you would invest  0.01  in Arista Power on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Arista Power or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.17%
Values	Daily Returns

Arista Power  vs.  Spirax Sarco Engineering PLC

Arista Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arista Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Arista Power is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Spirax Sarco Enginee

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spirax Sarco Engineering PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Spirax Sarco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arista Power and Spirax Sarco

The main advantage of trading using opposite Arista Power and Spirax Sarco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arista Power position performs unexpectedly, Spirax Sarco 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 Spirax Sarco will offset losses from the drop in Spirax Sarco's long position.

The idea behind Arista Power and Spirax Sarco Engineering PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.