Correlation Between Spire Healthcare and Indivior PLC

Can any of the company-specific risk be diversified away by investing in both Spire Healthcare and Indivior 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 Spire Healthcare and Indivior PLC 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 Indivior PLC, you can compare the effects of market volatilities on Spire Healthcare and Indivior 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 Spire Healthcare with a short position of Indivior PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Healthcare and Indivior PLC.

Diversification Opportunities for Spire Healthcare and Indivior PLC

0.29

Correlation Coefficient

Spire Healthcare  Indivior PLC

Modest diversification

The 3 months correlation between Spire and Indivior is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Indivior PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indivior PLC 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 Indivior PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indivior PLC has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Indivior PLC go up and down completely randomly.

Pair Corralation between Spire Healthcare and Indivior PLC

Assuming the 90 days trading horizon Spire Healthcare is expected to generate 5.09 times less return on investment than Indivior PLC. But when comparing it to its historical volatility, Spire Healthcare Group is 3.21 times less risky than Indivior PLC. It trades about 0.17 of its potential returns per unit of risk. Indivior PLC is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  87,000  in Indivior PLC on October 4, 2024 and sell it today you would earn a total of  13,400  from holding Indivior PLC or generate 15.4% return on investment over 90 days.

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

Spire Healthcare Group  vs.  Indivior PLC

Spire Healthcare

Risk-Adjusted Performance

0 of 100

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 rather sound technical and fundamental indicators, Spire Healthcare is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Indivior PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indivior PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Indivior PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spire Healthcare and Indivior PLC

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

The idea behind Spire Healthcare Group and Indivior 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.