Correlation Between SPECTRAL MEDICAL and KOBE STEEL

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

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

Diversification Opportunities for SPECTRAL MEDICAL and KOBE STEEL

0.23

Correlation Coefficient

SPECTRAL MEDICAL  KOBE STEEL

Modest diversification

The 3 months correlation between SPECTRAL and KOBE is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SPECTRAL MEDICAL and KOBE STEEL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOBE STEEL LTD and SPECTRAL MEDICAL 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 SPECTRAL MEDICAL are associated (or correlated) with KOBE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOBE STEEL LTD has no effect on the direction of SPECTRAL MEDICAL i.e., SPECTRAL MEDICAL and KOBE STEEL go up and down completely randomly.

Pair Corralation between SPECTRAL MEDICAL and KOBE STEEL

Assuming the 90 days horizon SPECTRAL MEDICAL is expected to generate 1.85 times more return on investment than KOBE STEEL. However, SPECTRAL MEDICAL is 1.85 times more volatile than KOBE STEEL LTD. It trades about 0.0 of its potential returns per unit of risk. KOBE STEEL LTD is currently generating about -0.1 per unit of risk. If you would invest  51.00  in SPECTRAL MEDICAL on April 24, 2025 and sell it today you would lose (1.00) from holding SPECTRAL MEDICAL or give up 1.96% of portfolio value over 90 days.

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

SPECTRAL MEDICAL  vs.  KOBE STEEL LTD

SPECTRAL MEDICAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPECTRAL MEDICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SPECTRAL MEDICAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

KOBE STEEL LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days KOBE STEEL LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SPECTRAL MEDICAL and KOBE STEEL

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

The idea behind SPECTRAL MEDICAL and KOBE STEEL LTD 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.