Correlation Between SOS and SPENN Technology

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

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

Diversification Opportunities for SOS and SPENN Technology

0.0

Correlation Coefficient

SOS  SPENN Technology

Pay attention - limited upside

The 3 months correlation between SOS and SPENN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SOS Limited and SPENN Technology AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPENN Technology and SOS 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 SOS Limited are associated (or correlated) with SPENN Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPENN Technology has no effect on the direction of SOS i.e., SOS and SPENN Technology go up and down completely randomly.

Pair Corralation between SOS and SPENN Technology

Considering the 90-day investment horizon SOS Limited is expected to under-perform the SPENN Technology. In addition to that, SOS is 2.48 times more volatile than SPENN Technology AS. It trades about -0.07 of its total potential returns per unit of risk. SPENN Technology AS is currently generating about -0.06 per unit of volatility. If you would invest  121.00  in SPENN Technology AS on September 23, 2024 and sell it today you would lose (60.00) from holding SPENN Technology AS or give up 49.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

SOS Limited  vs.  SPENN Technology AS

SOS Limited

Risk-Adjusted Performance

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Very Weak

Over the last 90 days SOS Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SPENN Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SOS and SPENN Technology

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

The idea behind SOS Limited and SPENN Technology AS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.