Correlation Between Pace Metals and Sparx Technology

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

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

Diversification Opportunities for Pace Metals and Sparx Technology

0.0

Correlation Coefficient

Pace Metals  Sparx Technology

Pay attention - limited upside

The 3 months correlation between Pace and Sparx is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pace Metals and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology and Pace Metals 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 Pace Metals 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 Pace Metals i.e., Pace Metals and Sparx Technology go up and down completely randomly.

Pair Corralation between Pace Metals and Sparx Technology

If you would invest  1,982  in Sparx Technology on April 23, 2025 and sell it today you would earn a total of  1,153  from holding Sparx Technology or generate 58.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Pace Metals  vs.  Sparx Technology

Pace Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pace Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Pace Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sparx Technology

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pace Metals and Sparx Technology

The main advantage of trading using opposite Pace Metals and Sparx Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Metals 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 Pace Metals 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.