Correlation Between Shimadzu and Spectris Plc

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

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

Diversification Opportunities for Shimadzu and Spectris Plc

0.21

Correlation Coefficient

Shimadzu  Spectris Plc

Modest diversification

The 3 months correlation between Shimadzu and Spectris is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Shimadzu and Spectris plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectris plc and Shimadzu 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 Shimadzu are associated (or correlated) with Spectris Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectris plc has no effect on the direction of Shimadzu i.e., Shimadzu and Spectris Plc go up and down completely randomly.

Pair Corralation between Shimadzu and Spectris Plc

Assuming the 90 days horizon Shimadzu is expected to under-perform the Spectris Plc. In addition to that, Shimadzu is 15.43 times more volatile than Spectris plc. It trades about -0.15 of its total potential returns per unit of risk. Spectris plc is currently generating about 0.04 per unit of volatility. If you would invest  2,935  in Spectris plc on December 30, 2024 and sell it today you would earn a total of  123.00  from holding Spectris plc or generate 4.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Shimadzu  vs.  Spectris plc

Shimadzu

Risk-Adjusted Performance

Very Weak

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

Spectris plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spectris plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting forward-looking indicators, Spectris Plc may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Shimadzu and Spectris Plc

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

The idea behind Shimadzu and Spectris plc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.