Correlation Between Spirit Telecom and Australian Agricultural

Can any of the company-specific risk be diversified away by investing in both Spirit Telecom and Australian Agricultural 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 Spirit Telecom and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spirit Telecom and Australian Agricultural, you can compare the effects of market volatilities on Spirit Telecom and Australian Agricultural 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 Spirit Telecom with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Telecom and Australian Agricultural.

Diversification Opportunities for Spirit Telecom and Australian Agricultural

0.0

Correlation Coefficient

Spirit Telecom  Australian Agricultural

Pay attention - limited upside

The 3 months correlation between Spirit and Australian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Telecom and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and Spirit Telecom 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 Spirit Telecom are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Spirit Telecom i.e., Spirit Telecom and Australian Agricultural go up and down completely randomly.

Pair Corralation between Spirit Telecom and Australian Agricultural

Assuming the 90 days trading horizon Spirit Telecom is expected to under-perform the Australian Agricultural. In addition to that, Spirit Telecom is 2.62 times more volatile than Australian Agricultural. It trades about -0.03 of its total potential returns per unit of risk. Australian Agricultural is currently generating about 0.08 per unit of volatility. If you would invest  137.00  in Australian Agricultural on November 27, 2024 and sell it today you would earn a total of  8.00  from holding Australian Agricultural or generate 5.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Spirit Telecom  vs.  Australian Agricultural

Spirit Telecom

Risk-Adjusted Performance

Weak

Over the last 90 days Spirit Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Australian Agricultural

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Agricultural are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Australian Agricultural may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Spirit Telecom and Australian Agricultural

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

The idea behind Spirit Telecom and Australian Agricultural 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.