Correlation Between ChemoMetec and SP Group

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

By analyzing existing cross correlation between ChemoMetec AS and SP Group AS, you can compare the effects of market volatilities on ChemoMetec and SP 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 ChemoMetec with a short position of SP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChemoMetec and SP Group.

Diversification Opportunities for ChemoMetec and SP Group

0.0

Correlation Coefficient

ChemoMetec  SP Group

Pay attention - limited upside

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

Pair Corralation between ChemoMetec and SP Group

If you would invest  41,640  in ChemoMetec AS on October 24, 2024 and sell it today you would earn a total of  10,010  from holding ChemoMetec AS or generate 24.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

ChemoMetec AS  vs.  SP Group AS

ChemoMetec AS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ChemoMetec AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ChemoMetec exhibited solid returns over the last few months and may actually be approaching a breakup point.

SP Group AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP Group AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, SP Group is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ChemoMetec and SP Group

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

The idea behind ChemoMetec AS and SP Group AS 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.