Correlation Between Spire Healthcare and Foresight Environmental

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

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

Diversification Opportunities for Spire Healthcare and Foresight Environmental

-0.59

Correlation Coefficient

Spire Healthcare  Foresight Environmental

Excellent diversification

The 3 months correlation between Spire and Foresight is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Foresight Environmental Infras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foresight Environmental and Spire Healthcare 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 Spire Healthcare Group are associated (or correlated) with Foresight Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foresight Environmental has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Foresight Environmental go up and down completely randomly.

Pair Corralation between Spire Healthcare and Foresight Environmental

Assuming the 90 days trading horizon Spire Healthcare Group is expected to under-perform the Foresight Environmental. In addition to that, Spire Healthcare is 1.65 times more volatile than Foresight Environmental Infrastructure. It trades about -0.16 of its total potential returns per unit of risk. Foresight Environmental Infrastructure is currently generating about 0.04 per unit of volatility. If you would invest  6,952  in Foresight Environmental Infrastructure on December 24, 2024 and sell it today you would earn a total of  238.00  from holding Foresight Environmental Infrastructure or generate 3.42% return on investment over 90 days.

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

Spire Healthcare Group  vs.  Foresight Environmental Infras

Spire Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spire Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Foresight Environmental

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Foresight Environmental Infrastructure are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Foresight Environmental is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Spire Healthcare and Foresight Environmental

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

The idea behind Spire Healthcare Group and Foresight Environmental Infrastructure 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.