Correlation Between Shufersal and Spuntech

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

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

Diversification Opportunities for Shufersal and Spuntech

-0.27

Correlation Coefficient

Shufersal  Spuntech

Very good diversification

The 3 months correlation between Shufersal and Spuntech is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shufersal and Spuntech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spuntech and Shufersal 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 Shufersal are associated (or correlated) with Spuntech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spuntech has no effect on the direction of Shufersal i.e., Shufersal and Spuntech go up and down completely randomly.

Pair Corralation between Shufersal and Spuntech

Assuming the 90 days trading horizon Shufersal is expected to under-perform the Spuntech. But the stock apears to be less risky and, when comparing its historical volatility, Shufersal is 2.88 times less risky than Spuntech. The stock trades about -0.15 of its potential returns per unit of risk. The Spuntech is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  40,790  in Spuntech on October 22, 2024 and sell it today you would earn a total of  1,310  from holding Spuntech or generate 3.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Shufersal  vs.  Spuntech

Shufersal

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shufersal are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Shufersal sustained solid returns over the last few months and may actually be approaching a breakup point.

Spuntech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spuntech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Spuntech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Shufersal and Spuntech

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

The idea behind Shufersal and Spuntech 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.