Correlation Between Spectral Med and TeraGo

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

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

Diversification Opportunities for Spectral Med and TeraGo

0.63

Correlation Coefficient

Spectral Med  TeraGo

Poor diversification

The 3 months correlation between Spectral and TeraGo is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Spectral Med and TeraGo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TeraGo Inc and Spectral Med 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 Spectral Med are associated (or correlated) with TeraGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TeraGo Inc has no effect on the direction of Spectral Med i.e., Spectral Med and TeraGo go up and down completely randomly.

Pair Corralation between Spectral Med and TeraGo

Assuming the 90 days trading horizon Spectral Med is expected to generate 1.16 times more return on investment than TeraGo. However, Spectral Med is 1.16 times more volatile than TeraGo Inc. It trades about 0.17 of its potential returns per unit of risk. TeraGo Inc is currently generating about -0.06 per unit of risk. If you would invest  49.00  in Spectral Med on December 23, 2024 and sell it today you would earn a total of  22.00  from holding Spectral Med or generate 44.9% return on investment over 90 days.

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

Spectral Med  vs.  TeraGo Inc

Spectral Med

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spectral Med are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Spectral Med displayed solid returns over the last few months and may actually be approaching a breakup point.

TeraGo Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TeraGo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Spectral Med and TeraGo

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

The idea behind Spectral Med and TeraGo Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.