Correlation Between Sparx Technology and US Financial

Can any of the company-specific risk be diversified away by investing in both Sparx Technology and US Financial 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 Sparx Technology and US Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sparx Technology and US Financial 15, you can compare the effects of market volatilities on Sparx Technology and US Financial 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 Sparx Technology with a short position of US Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparx Technology and US Financial.

Diversification Opportunities for Sparx Technology and US Financial

0.39

Correlation Coefficient

Sparx Technology  US Financial

Weak diversification

The 3 months correlation between Sparx and FTU-PB is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sparx Technology and US Financial 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Financial 15 and Sparx Technology 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 Sparx Technology are associated (or correlated) with US Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Financial 15 has no effect on the direction of Sparx Technology i.e., Sparx Technology and US Financial go up and down completely randomly.

Pair Corralation between Sparx Technology and US Financial

Assuming the 90 days trading horizon Sparx Technology is expected to under-perform the US Financial. In addition to that, Sparx Technology is 1.82 times more volatile than US Financial 15. It trades about -0.12 of its total potential returns per unit of risk. US Financial 15 is currently generating about 0.0 per unit of volatility. If you would invest  738.00  in US Financial 15 on December 30, 2024 and sell it today you would lose (5.00) from holding US Financial 15 or give up 0.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Sparx Technology  vs.  US Financial 15

Sparx Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparx Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

US Financial 15

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Financial 15 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, US Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sparx Technology and US Financial

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

The idea behind Sparx Technology and US Financial 15 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.