Correlation Between Spectris Plc and Mind Technology

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

By analyzing existing cross correlation between Spectris plc and Mind Technology Pref, you can compare the effects of market volatilities on Spectris Plc and Mind Technology 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 Spectris Plc with a short position of Mind Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectris Plc and Mind Technology.

Diversification Opportunities for Spectris Plc and Mind Technology

0.22

Correlation Coefficient

Spectris Plc  Mind Technology

Modest diversification

The 3 months correlation between Spectris and Mind is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Spectris plc and Mind Technology Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Technology Pref and Spectris Plc 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 Spectris plc are associated (or correlated) with Mind Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Technology Pref has no effect on the direction of Spectris Plc i.e., Spectris Plc and Mind Technology go up and down completely randomly.

Pair Corralation between Spectris Plc and Mind Technology

Assuming the 90 days horizon Spectris plc is expected to generate 0.16 times more return on investment than Mind Technology. However, Spectris plc is 6.42 times less risky than Mind Technology. It trades about -0.08 of its potential returns per unit of risk. Mind Technology Pref is currently generating about -0.17 per unit of risk. If you would invest  3,867  in Spectris plc on July 24, 2024 and sell it today you would lose (623.00) from holding Spectris plc or give up 16.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

Spectris plc  vs.  Mind Technology Pref

Spectris plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spectris plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mind Technology Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mind Technology Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in November 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Spectris Plc and Mind Technology

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

The idea behind Spectris plc and Mind Technology Pref 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..