Correlation Between DevEx Resources and SPECTRAL MEDICAL

Can any of the company-specific risk be diversified away by investing in both DevEx Resources and SPECTRAL MEDICAL 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 DevEx Resources and SPECTRAL MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DevEx Resources Limited and SPECTRAL MEDICAL, you can compare the effects of market volatilities on DevEx Resources and SPECTRAL MEDICAL 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 DevEx Resources with a short position of SPECTRAL MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of DevEx Resources and SPECTRAL MEDICAL.

Diversification Opportunities for DevEx Resources and SPECTRAL MEDICAL

0.74

Correlation Coefficient

DevEx Resources  SPECTRAL MEDICAL

Poor diversification

The 3 months correlation between DevEx and SPECTRAL is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding DevEx Resources Limited and SPECTRAL MEDICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPECTRAL MEDICAL and DevEx Resources 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 DevEx Resources Limited are associated (or correlated) with SPECTRAL MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPECTRAL MEDICAL has no effect on the direction of DevEx Resources i.e., DevEx Resources and SPECTRAL MEDICAL go up and down completely randomly.

Pair Corralation between DevEx Resources and SPECTRAL MEDICAL

Assuming the 90 days horizon DevEx Resources Limited is expected to under-perform the SPECTRAL MEDICAL. In addition to that, DevEx Resources is 2.08 times more volatile than SPECTRAL MEDICAL. It trades about -0.02 of its total potential returns per unit of risk. SPECTRAL MEDICAL is currently generating about -0.03 per unit of volatility. If you would invest  38.00  in SPECTRAL MEDICAL on October 25, 2024 and sell it today you would lose (6.00) from holding SPECTRAL MEDICAL or give up 15.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

DevEx Resources Limited  vs.  SPECTRAL MEDICAL

DevEx Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DevEx Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SPECTRAL MEDICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPECTRAL MEDICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with DevEx Resources and SPECTRAL MEDICAL

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

The idea behind DevEx Resources Limited and SPECTRAL MEDICAL 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.