Correlation Between Spectris Plc and Coherent

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

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

Diversification Opportunities for Spectris Plc and Coherent

-0.77

Correlation Coefficient

Spectris Plc  Coherent

Pay attention - limited upside

The 3 months correlation between Spectris and Coherent is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Spectris plc and Coherent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coherent and Spectris 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 Spectris plc are associated (or correlated) with Coherent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coherent has no effect on the direction of Spectris Plc i.e., Spectris Plc and Coherent go up and down completely randomly.

Pair Corralation between Spectris Plc and Coherent

Assuming the 90 days horizon Spectris plc is expected to under-perform the Coherent. But the pink sheet apears to be less risky and, when comparing its historical volatility, Spectris plc is 1.07 times less risky than Coherent. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Coherent is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  7,597  in Coherent on September 12, 2024 and sell it today you would earn a total of  2,424  from holding Coherent or generate 31.91% return on investment over 90 days.

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

Spectris plc  vs.  Coherent

Spectris plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spectris plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, Spectris Plc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Coherent

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coherent are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Coherent reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spectris Plc and Coherent

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

The idea behind Spectris plc and Coherent 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..