Correlation Between Spire Global and Torrent Capital

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

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

Diversification Opportunities for Spire Global and Torrent Capital

0.15

Correlation Coefficient

Spire Global  Torrent Capital

Average diversification

The 3 months correlation between Spire and Torrent is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Torrent Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torrent Capital 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 Torrent Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torrent Capital has no effect on the direction of Spire Global i.e., Spire Global and Torrent Capital go up and down completely randomly.

Pair Corralation between Spire Global and Torrent Capital

Given the investment horizon of 90 days Spire Global is expected to under-perform the Torrent Capital. In addition to that, Spire Global is 3.49 times more volatile than Torrent Capital. It trades about -0.01 of its total potential returns per unit of risk. Torrent Capital is currently generating about 0.09 per unit of volatility. If you would invest  39.00  in Torrent Capital on December 1, 2024 and sell it today you would earn a total of  5.00  from holding Torrent Capital or generate 12.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Spire Global  vs.  Torrent Capital

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 relatively invariable forward indicators, Spire Global is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Torrent Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Torrent Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Torrent Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spire Global and Torrent Capital

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

The idea behind Spire Global and Torrent Capital 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.