Correlation Between Ispire Technology and Transurban

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

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

Diversification Opportunities for Ispire Technology and Transurban

0.41

Correlation Coefficient

Ispire Technology  Transurban

Very weak diversification

The 3 months correlation between Ispire and Transurban is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ispire Technology Common and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group and Ispire Technology 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 Ispire Technology Common are associated (or correlated) with Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Ispire Technology i.e., Ispire Technology and Transurban go up and down completely randomly.

Pair Corralation between Ispire Technology and Transurban

Given the investment horizon of 90 days Ispire Technology Common is expected to under-perform the Transurban. But the stock apears to be less risky and, when comparing its historical volatility, Ispire Technology Common is 1.27 times less risky than Transurban. The stock trades about -0.25 of its potential returns per unit of risk. The Transurban Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  811.00  in Transurban Group on December 30, 2024 and sell it today you would earn a total of  75.00  from holding Transurban Group or generate 9.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Ispire Technology Common  vs.  Transurban Group

Ispire Technology Common

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ispire Technology Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Transurban Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transurban Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Transurban reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ispire Technology and Transurban

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

The idea behind Ispire Technology Common and Transurban 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 Transaction History module to view history of all your transactions and understand their impact on performance.