Correlation Between Strauss and Spuntech

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

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

Diversification Opportunities for Strauss and Spuntech

0.0

Correlation Coefficient

Strauss  Spuntech

Pay attention - limited upside

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

Pair Corralation between Strauss and Spuntech

Assuming the 90 days trading horizon Strauss Group is expected to under-perform the Spuntech. But the stock apears to be less risky and, when comparing its historical volatility, Strauss Group is 3.39 times less risky than Spuntech. The stock trades about -0.15 of its potential returns per unit of risk. The Spuntech is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  41,360  in Spuntech on October 7, 2024 and sell it today you would earn a total of  870.00  from holding Spuntech or generate 2.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Strauss Group  vs.  Spuntech

Strauss Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strauss Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Strauss sustained solid returns over the last few months and may actually be approaching a breakup point.

Spuntech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spuntech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Spuntech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Strauss and Spuntech

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

The idea behind Strauss Group and Spuntech 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.