Correlation Between Spire Global and Wah Nobel

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

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

Diversification Opportunities for Spire Global and Wah Nobel

-0.2

Correlation Coefficient

Spire Global  Wah Nobel

Good diversification

The 3 months correlation between Spire and Wah is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Wah Nobel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Nobel Chemicals 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 Wah Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Nobel Chemicals has no effect on the direction of Spire Global i.e., Spire Global and Wah Nobel go up and down completely randomly.

Pair Corralation between Spire Global and Wah Nobel

Given the investment horizon of 90 days Spire Global is expected to under-perform the Wah Nobel. In addition to that, Spire Global is 2.57 times more volatile than Wah Nobel Chemicals. It trades about -0.01 of its total potential returns per unit of risk. Wah Nobel Chemicals is currently generating about 0.0 per unit of volatility. If you would invest  23,506  in Wah Nobel Chemicals on December 2, 2024 and sell it today you would lose (755.00) from holding Wah Nobel Chemicals or give up 3.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Spire Global  vs.  Wah Nobel Chemicals

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.

Wah Nobel Chemicals

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Spire Global and Wah Nobel

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

The idea behind Spire Global and Wah Nobel Chemicals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.