Correlation Between SSgA SPDR and Aeorema Communications

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

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

Diversification Opportunities for SSgA SPDR and Aeorema Communications

0.61

Correlation Coefficient

SSgA SPDR  Aeorema Communications

Poor diversification

The 3 months correlation between SSgA and Aeorema is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications and SSgA SPDR 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 SSgA SPDR ETFs are associated (or correlated) with Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and Aeorema Communications go up and down completely randomly.

Pair Corralation between SSgA SPDR and Aeorema Communications

Assuming the 90 days trading horizon SSgA SPDR ETFs is expected to generate 0.41 times more return on investment than Aeorema Communications. However, SSgA SPDR ETFs is 2.42 times less risky than Aeorema Communications. It trades about 0.33 of its potential returns per unit of risk. Aeorema Communications Plc is currently generating about 0.1 per unit of risk. If you would invest  16,736  in SSgA SPDR ETFs on April 20, 2025 and sell it today you would earn a total of  2,770  from holding SSgA SPDR ETFs or generate 16.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

SSgA SPDR ETFs  vs.  Aeorema Communications Plc

SSgA SPDR ETFs

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR ETFs are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SSgA SPDR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aeorema Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aeorema Communications Plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Aeorema Communications may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with SSgA SPDR and Aeorema Communications

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

The idea behind SSgA SPDR ETFs and Aeorema Communications Plc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.