Correlation Between Sparx Technology and Sangoma Technologies

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

By analyzing existing cross correlation between Sparx Technology and Sangoma Technologies Corp, you can compare the effects of market volatilities on Sparx Technology and Sangoma Technologies 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 Sangoma Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparx Technology and Sangoma Technologies.

Diversification Opportunities for Sparx Technology and Sangoma Technologies

0.8

Correlation Coefficient

Sparx Technology  Sangoma Technologies

Very poor diversification

The 3 months correlation between Sparx and Sangoma is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sparx Technology and Sangoma Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangoma Technologies Corp 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 Sangoma Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangoma Technologies Corp has no effect on the direction of Sparx Technology i.e., Sparx Technology and Sangoma Technologies go up and down completely randomly.

Pair Corralation between Sparx Technology and Sangoma Technologies

Assuming the 90 days trading horizon Sparx Technology is expected to generate 12.35 times more return on investment than Sangoma Technologies. However, Sparx Technology is 12.35 times more volatile than Sangoma Technologies Corp. It trades about 0.05 of its potential returns per unit of risk. Sangoma Technologies Corp is currently generating about 0.05 per unit of risk. If you would invest  2.00  in Sparx Technology on September 23, 2024 and sell it today you would earn a total of  2,740  from holding Sparx Technology or generate 137000.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Sparx Technology  vs.  Sangoma Technologies Corp

Sparx Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Sangoma Technologies Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sangoma Technologies Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Sangoma Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparx Technology and Sangoma Technologies

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

The idea behind Sparx Technology and Sangoma Technologies Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.