Correlation Between Spire Healthcare and Quilter PLC

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

Diversification Opportunities for Spire Healthcare and Quilter PLC

0.48

Correlation Coefficient

Spire Healthcare  Quilter PLC

Very weak diversification

The 3 months correlation between Spire and Quilter is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Quilter PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quilter 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 Quilter PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quilter PLC has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Quilter PLC go up and down completely randomly.

Pair Corralation between Spire Healthcare and Quilter PLC

Assuming the 90 days trading horizon Spire Healthcare is expected to generate 18.51 times less return on investment than Quilter PLC. But when comparing it to its historical volatility, Spire Healthcare Group is 1.42 times less risky than Quilter PLC. It trades about 0.01 of its potential returns per unit of risk. Quilter PLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  10,132  in Quilter PLC on October 25, 2024 and sell it today you would earn a total of  6,068  from holding Quilter PLC or generate 59.89% return on investment over 90 days.

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

Spire Healthcare Group  vs.  Quilter PLC

Spire Healthcare

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Healthcare Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Spire Healthcare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Quilter PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quilter PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Quilter PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Spire Healthcare and Quilter PLC

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

The idea behind Spire Healthcare Group and Quilter 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.