Correlation Between Spire Global and TPL Plastech

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

By analyzing existing cross correlation between Spire Global and TPL Plastech Limited, you can compare the effects of market volatilities on Spire Global and TPL Plastech 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 TPL Plastech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and TPL Plastech.

Diversification Opportunities for Spire Global and TPL Plastech

0.63

Correlation Coefficient

Spire Global  TPL Plastech

Poor diversification

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

Pair Corralation between Spire Global and TPL Plastech

Given the investment horizon of 90 days Spire Global is expected to under-perform the TPL Plastech. In addition to that, Spire Global is 2.57 times more volatile than TPL Plastech Limited. It trades about -0.05 of its total potential returns per unit of risk. TPL Plastech Limited is currently generating about -0.13 per unit of volatility. If you would invest  10,069  in TPL Plastech Limited on December 30, 2024 and sell it today you would lose (2,585) from holding TPL Plastech Limited or give up 25.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Spire Global  vs.  TPL Plastech Limited

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.

TPL Plastech Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPL Plastech Limited 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Spire Global and TPL Plastech

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

The idea behind Spire Global and TPL Plastech Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.