Correlation Between Gfinity PLC and Spire Healthcare

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

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

Diversification Opportunities for Gfinity PLC and Spire Healthcare

0.45

Correlation Coefficient

Gfinity PLC  Spire Healthcare

Very weak diversification

The 3 months correlation between Gfinity and Spire is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Gfinity PLC and Spire Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Healthcare and Gfinity PLC 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 Gfinity PLC are associated (or correlated) with Spire Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Healthcare has no effect on the direction of Gfinity PLC i.e., Gfinity PLC and Spire Healthcare go up and down completely randomly.

Pair Corralation between Gfinity PLC and Spire Healthcare

Assuming the 90 days trading horizon Gfinity PLC is expected to generate 17.07 times more return on investment than Spire Healthcare. However, Gfinity PLC is 17.07 times more volatile than Spire Healthcare Group. It trades about 0.29 of its potential returns per unit of risk. Spire Healthcare Group is currently generating about -0.03 per unit of risk. If you would invest  4.25  in Gfinity PLC on October 13, 2024 and sell it today you would earn a total of  3.25  from holding Gfinity PLC or generate 76.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	73.68%
Values	Daily Returns

Gfinity PLC  vs.  Spire Healthcare Group

Gfinity PLC

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Gfinity PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Gfinity PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Spire Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gfinity PLC and Spire Healthcare

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

The idea behind Gfinity PLC and Spire Healthcare Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.