Correlation Between Stille AB and SpectraCure

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

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

Diversification Opportunities for Stille AB and SpectraCure

0.28

Correlation Coefficient

Stille AB  SpectraCure

Modest diversification

The 3 months correlation between Stille and SpectraCure is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Stille AB and SpectraCure AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpectraCure AB and Stille AB 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 Stille AB are associated (or correlated) with SpectraCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpectraCure AB has no effect on the direction of Stille AB i.e., Stille AB and SpectraCure go up and down completely randomly.

Pair Corralation between Stille AB and SpectraCure

Assuming the 90 days trading horizon Stille AB is expected to generate 0.47 times more return on investment than SpectraCure. However, Stille AB is 2.11 times less risky than SpectraCure. It trades about 0.02 of its potential returns per unit of risk. SpectraCure AB is currently generating about -0.14 per unit of risk. If you would invest  21,800  in Stille AB on September 2, 2024 and sell it today you would earn a total of  200.00  from holding Stille AB or generate 0.92% return on investment over 90 days.

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

Stille AB  vs.  SpectraCure AB

Stille AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stille AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Stille AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SpectraCure AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SpectraCure AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Stille AB and SpectraCure

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

The idea behind Stille AB and SpectraCure AB 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.