Correlation Between Spire Global and Seoam Machinery

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

By analyzing existing cross correlation between Spire Global and Seoam Machinery Industry, you can compare the effects of market volatilities on Spire Global and Seoam Machinery 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 Global with a short position of Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Seoam Machinery.

Diversification Opportunities for Spire Global and Seoam Machinery

0.36

Correlation Coefficient

Spire Global  Seoam Machinery

Weak diversification

The 3 months correlation between Spire and Seoam is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry and Spire Global 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 Global are associated (or correlated) with Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of Spire Global i.e., Spire Global and Seoam Machinery go up and down completely randomly.

Pair Corralation between Spire Global and Seoam Machinery

Given the investment horizon of 90 days Spire Global is expected to under-perform the Seoam Machinery. In addition to that, Spire Global is 4.57 times more volatile than Seoam Machinery Industry. It trades about -0.05 of its total potential returns per unit of risk. Seoam Machinery Industry is currently generating about -0.04 per unit of volatility. If you would invest  362,000  in Seoam Machinery Industry on December 29, 2024 and sell it today you would lose (18,500) from holding Seoam Machinery Industry or give up 5.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.08%
Values	Daily Returns

Spire Global  vs.  Seoam Machinery Industry

Spire Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spire Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Seoam Machinery Industry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seoam Machinery Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Seoam Machinery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Spire Global and Seoam Machinery

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

The idea behind Spire Global and Seoam Machinery Industry 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 Stocks Directory module to find actively traded stocks across global markets.