Correlation Between SPECTRAL MEDICAL and FIRST SAVINGS

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

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

Diversification Opportunities for SPECTRAL MEDICAL and FIRST SAVINGS

-0.23

Correlation Coefficient

SPECTRAL MEDICAL  FIRST SAVINGS

Very good diversification

The 3 months correlation between SPECTRAL and FIRST is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding SPECTRAL MEDICAL and FIRST SAVINGS FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SAVINGS FINL and SPECTRAL MEDICAL 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 SPECTRAL MEDICAL are associated (or correlated) with FIRST SAVINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SAVINGS FINL has no effect on the direction of SPECTRAL MEDICAL i.e., SPECTRAL MEDICAL and FIRST SAVINGS go up and down completely randomly.

Pair Corralation between SPECTRAL MEDICAL and FIRST SAVINGS

Assuming the 90 days horizon SPECTRAL MEDICAL is expected to generate 1.01 times less return on investment than FIRST SAVINGS. In addition to that, SPECTRAL MEDICAL is 2.34 times more volatile than FIRST SAVINGS FINL. It trades about 0.04 of its total potential returns per unit of risk. FIRST SAVINGS FINL is currently generating about 0.1 per unit of volatility. If you would invest  1,136  in FIRST SAVINGS FINL on October 24, 2024 and sell it today you would earn a total of  1,124  from holding FIRST SAVINGS FINL or generate 98.94% return on investment over 90 days.

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

SPECTRAL MEDICAL  vs.  FIRST SAVINGS FINL

SPECTRAL MEDICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPECTRAL MEDICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

FIRST SAVINGS FINL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SAVINGS FINL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FIRST SAVINGS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SPECTRAL MEDICAL and FIRST SAVINGS

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

The idea behind SPECTRAL MEDICAL and FIRST SAVINGS FINL 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.