Correlation Between Spectris Plc and Track

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

By analyzing existing cross correlation between Spectris plc and Track Group, you can compare the effects of market volatilities on Spectris Plc and Track 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 Track. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectris Plc and Track.

Diversification Opportunities for Spectris Plc and Track

0.05

Correlation Coefficient

Spectris Plc  Track

Significant diversification

The 3 months correlation between Spectris and Track is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Spectris plc and Track Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Track Group 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 Track. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Track Group has no effect on the direction of Spectris Plc i.e., Spectris Plc and Track go up and down completely randomly.

Pair Corralation between Spectris Plc and Track

Assuming the 90 days horizon Spectris Plc is expected to generate 32.25 times less return on investment than Track. But when comparing it to its historical volatility, Spectris plc is 3.63 times less risky than Track. It trades about 0.0 of its potential returns per unit of risk. Track Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Track Group on September 29, 2024 and sell it today you would lose (25.00) from holding Track Group or give up 59.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.66%
Values	Daily Returns

Spectris plc  vs.  Track Group

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 conflicting performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Track Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Track Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Track disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spectris Plc and Track

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

The idea behind Spectris plc and Track Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.