Correlation Between Spirent Communications and AGR GROUP

Can any of the company-specific risk be diversified away by investing in both Spirent Communications and AGR GROUP 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 AGR GROUP 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 AGR GROUP A , you can compare the effects of market volatilities on Spirent Communications and AGR GROUP 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 AGR GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and AGR GROUP.

Diversification Opportunities for Spirent Communications and AGR GROUP

0.68

Correlation Coefficient

Spirent Communications  AGR GROUP

Poor diversification

The 3 months correlation between Spirent and AGR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and AGR GROUP A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGR GROUP A 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 AGR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGR GROUP A has no effect on the direction of Spirent Communications i.e., Spirent Communications and AGR GROUP go up and down completely randomly.

Pair Corralation between Spirent Communications and AGR GROUP

Assuming the 90 days horizon Spirent Communications plc is expected to generate 0.71 times more return on investment than AGR GROUP. However, Spirent Communications plc is 1.42 times less risky than AGR GROUP. It trades about 0.01 of its potential returns per unit of risk. AGR GROUP A is currently generating about -0.12 per unit of risk. If you would invest  216.00  in Spirent Communications plc on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Spirent Communications plc or generate 0.0% return on investment over 90 days.

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

Spirent Communications plc  vs.  AGR GROUP A

Spirent Communications

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spirent Communications plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Spirent Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AGR GROUP A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGR GROUP A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, AGR GROUP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Spirent Communications and AGR GROUP

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

The idea behind Spirent Communications plc and AGR GROUP A 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.