Correlation Between Porvair Plc and Spire Healthcare

Can any of the company-specific risk be diversified away by investing in both Porvair 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 Porvair 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 Porvair plc and Spire Healthcare Group, you can compare the effects of market volatilities on Porvair 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 Porvair Plc with a short position of Spire Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porvair Plc and Spire Healthcare.

Diversification Opportunities for Porvair Plc and Spire Healthcare

0.62

Correlation Coefficient

Porvair Plc  Spire Healthcare

Poor diversification

The 3 months correlation between Porvair and Spire is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Porvair 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 Porvair 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 Porvair 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 Porvair Plc i.e., Porvair Plc and Spire Healthcare go up and down completely randomly.

Pair Corralation between Porvair Plc and Spire Healthcare

Assuming the 90 days trading horizon Porvair plc is expected to generate 0.82 times more return on investment than Spire Healthcare. However, Porvair plc is 1.22 times less risky than Spire Healthcare. It trades about -0.01 of its potential returns per unit of risk. Spire Healthcare Group is currently generating about -0.13 per unit of risk. If you would invest  70,200  in Porvair plc on December 30, 2024 and sell it today you would lose (2,200) from holding Porvair plc or give up 3.13% of portfolio value over 90 days.

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

Porvair plc  vs.  Spire Healthcare Group

Porvair plc

Risk-Adjusted Performance

Very Weak

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

Spire Healthcare

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Porvair Plc and Spire Healthcare

The main advantage of trading using opposite Porvair Plc and Spire Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porvair 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 Porvair 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.