Correlation Between ISign Media and Sparx Technology

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

By analyzing existing cross correlation between iSign Media Solutions and Sparx Technology, you can compare the effects of market volatilities on ISign Media and Sparx Technology 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 ISign Media with a short position of Sparx Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISign Media and Sparx Technology.

Diversification Opportunities for ISign Media and Sparx Technology

0.02

Correlation Coefficient

ISign Media  Sparx Technology

Significant diversification

The 3 months correlation between ISign and Sparx is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding iSign Media Solutions and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology and ISign Media 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 iSign Media Solutions are associated (or correlated) with Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of ISign Media i.e., ISign Media and Sparx Technology go up and down completely randomly.

Pair Corralation between ISign Media and Sparx Technology

Assuming the 90 days horizon iSign Media Solutions is expected to under-perform the Sparx Technology. But the stock apears to be less risky and, when comparing its historical volatility, iSign Media Solutions is 3.12 times less risky than Sparx Technology. The stock trades about -0.18 of its potential returns per unit of risk. The Sparx Technology is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,664  in Sparx Technology on October 11, 2024 and sell it today you would earn a total of  220.00  from holding Sparx Technology or generate 8.26% return on investment over 90 days.

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

iSign Media Solutions  vs.  Sparx Technology

iSign Media Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iSign Media Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ISign Media is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sparx Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ISign Media and Sparx Technology

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

The idea behind iSign Media Solutions and Sparx Technology 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.