Correlation Between WELL Health and Sparx Technology

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

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

Diversification Opportunities for WELL Health and Sparx Technology

-0.59

Correlation Coefficient

WELL Health  Sparx Technology

Excellent diversification

The 3 months correlation between WELL and Sparx is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding WELL Health Technologies and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology and WELL Health 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 WELL Health Technologies are associated (or correlated) with Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of WELL Health i.e., WELL Health and Sparx Technology go up and down completely randomly.

Pair Corralation between WELL Health and Sparx Technology

Assuming the 90 days trading horizon WELL Health Technologies is expected to under-perform the Sparx Technology. But the stock apears to be less risky and, when comparing its historical volatility, WELL Health Technologies is 64.16 times less risky than Sparx Technology. The stock trades about -0.11 of its potential returns per unit of risk. The Sparx Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Sparx Technology on February 2, 2024 and sell it today you would earn a total of  2,262  from holding Sparx Technology or generate 452500.0% return on investment over 90 days.

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

WELL Health Technologies  vs.  Sparx Technology

WELL Health Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WELL Health Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, WELL Health is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Sparx Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WELL Health and Sparx Technology

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

The idea behind WELL Health Technologies and Sparx Technology 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.