Correlation Between Spirent Communications and PACIFIC ONLINE

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

Diversification Opportunities for Spirent Communications and PACIFIC ONLINE

0.0

Correlation Coefficient

Spirent Communications  PACIFIC ONLINE

Pay attention - limited upside

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

Pair Corralation between Spirent Communications and PACIFIC ONLINE

If you would invest  216.00  in Spirent Communications plc on December 30, 2024 and sell it today you would earn a total of  2.00  from holding Spirent Communications plc or generate 0.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Spirent Communications plc  vs.  PACIFIC ONLINE

Spirent Communications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spirent Communications plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Spirent Communications is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

PACIFIC ONLINE

Risk-Adjusted Performance

Very Weak

Over the last 90 days PACIFIC ONLINE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PACIFIC ONLINE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Spirent Communications and PACIFIC ONLINE

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

The idea behind Spirent Communications plc and PACIFIC ONLINE 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.