Correlation Between Spire Healthcare and Sabien Technology

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

Diversification Opportunities for Spire Healthcare and Sabien Technology

0.63

Correlation Coefficient

Spire Healthcare  Sabien Technology

Poor diversification

The 3 months correlation between Spire and Sabien is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology 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 Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Sabien Technology go up and down completely randomly.

Pair Corralation between Spire Healthcare and Sabien Technology

Assuming the 90 days trading horizon Spire Healthcare Group is expected to generate 1.33 times more return on investment than Sabien Technology. However, Spire Healthcare is 1.33 times more volatile than Sabien Technology Group. It trades about -0.13 of its potential returns per unit of risk. Sabien Technology Group is currently generating about -0.45 per unit of risk. If you would invest  22,350  in Spire Healthcare Group on December 29, 2024 and sell it today you would lose (4,490) from holding Spire Healthcare Group or give up 20.09% of portfolio value over 90 days.

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

Spire Healthcare Group  vs.  Sabien Technology Group

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 unsteady 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.

Sabien Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sabien Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting 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.

Pair Trading with Spire Healthcare and Sabien Technology

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

The idea behind Spire Healthcare Group and Sabien Technology Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.