Correlation Between SPACE and Marlin

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

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

Diversification Opportunities for SPACE and Marlin

0.81

Correlation Coefficient

SPACE  Marlin

Very poor diversification

The 3 months correlation between SPACE and Marlin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Marlin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marlin and SPACE 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 SPACE are associated (or correlated) with Marlin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marlin has no effect on the direction of SPACE i.e., SPACE and Marlin go up and down completely randomly.

Pair Corralation between SPACE and Marlin

Assuming the 90 days horizon SPACE is expected to generate 0.85 times more return on investment than Marlin. However, SPACE is 1.18 times less risky than Marlin. It trades about -0.08 of its potential returns per unit of risk. Marlin is currently generating about -0.2 per unit of risk. If you would invest  87.00  in SPACE on January 30, 2024 and sell it today you would lose (10.00) from holding SPACE or give up 11.49% of portfolio value over 90 days.

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

SPACE  vs.  Marlin

SPACE

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPACE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SPACE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Marlin

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marlin are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Marlin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPACE and Marlin

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

The idea behind SPACE and Marlin 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.