Correlation Between Software Circle and Workspace Group

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

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

Diversification Opportunities for Software Circle and Workspace Group

-0.36

Correlation Coefficient

Software Circle  Workspace Group

Very good diversification

The 3 months correlation between Software and Workspace is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Software Circle plc and Workspace Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workspace Group PLC and Software Circle 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 Software Circle plc are associated (or correlated) with Workspace Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workspace Group PLC has no effect on the direction of Software Circle i.e., Software Circle and Workspace Group go up and down completely randomly.

Pair Corralation between Software Circle and Workspace Group

Assuming the 90 days trading horizon Software Circle plc is expected to generate 1.35 times more return on investment than Workspace Group. However, Software Circle is 1.35 times more volatile than Workspace Group PLC. It trades about 0.04 of its potential returns per unit of risk. Workspace Group PLC is currently generating about -0.03 per unit of risk. If you would invest  2,800  in Software Circle plc on April 22, 2025 and sell it today you would earn a total of  100.00  from holding Software Circle plc or generate 3.57% return on investment over 90 days.

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

Software Circle plc  vs.  Workspace Group PLC

Software Circle plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Software Circle plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Software Circle is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Workspace Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Workspace Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Workspace Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Software Circle and Workspace Group

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

The idea behind Software Circle plc and Workspace Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.