Correlation Between Spirent Communications and ALBIS LEASING

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

Diversification Opportunities for Spirent Communications and ALBIS LEASING

-0.12

Correlation Coefficient

Spirent Communications  ALBIS LEASING

Good diversification

The 3 months correlation between Spirent and ALBIS is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and ALBIS LEASING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALBIS LEASING AG 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 ALBIS LEASING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALBIS LEASING AG has no effect on the direction of Spirent Communications i.e., Spirent Communications and ALBIS LEASING go up and down completely randomly.

Pair Corralation between Spirent Communications and ALBIS LEASING

Assuming the 90 days horizon Spirent Communications plc is expected to generate 3.15 times more return on investment than ALBIS LEASING. However, Spirent Communications is 3.15 times more volatile than ALBIS LEASING AG. It trades about -0.02 of its potential returns per unit of risk. ALBIS LEASING AG is currently generating about -0.06 per unit of risk. If you would invest  206.00  in Spirent Communications plc on October 23, 2024 and sell it today you would lose (6.00) from holding Spirent Communications plc or give up 2.91% of portfolio value over 90 days.

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

Spirent Communications plc  vs.  ALBIS LEASING AG

Spirent Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spirent Communications plc has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

ALBIS LEASING AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALBIS LEASING AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, ALBIS LEASING is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Spirent Communications and ALBIS LEASING

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

The idea behind Spirent Communications plc and ALBIS LEASING AG 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.