Correlation Between Astra Energy and Smart Powerr

Can any of the company-specific risk be diversified away by investing in both Astra Energy and Smart Powerr 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 Astra Energy and Smart Powerr into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astra Energy and Smart Powerr Corp, you can compare the effects of market volatilities on Astra Energy and Smart Powerr 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 Astra Energy with a short position of Smart Powerr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra Energy and Smart Powerr.

Diversification Opportunities for Astra Energy and Smart Powerr

-0.46

Correlation Coefficient

Astra Energy  Smart Powerr

Very good diversification

The 3 months correlation between Astra and Smart is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Astra Energy and Smart Powerr Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Powerr Corp and Astra Energy 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 Astra Energy are associated (or correlated) with Smart Powerr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Powerr Corp has no effect on the direction of Astra Energy i.e., Astra Energy and Smart Powerr go up and down completely randomly.

Pair Corralation between Astra Energy and Smart Powerr

Given the investment horizon of 90 days Astra Energy is expected to generate 1.06 times less return on investment than Smart Powerr. In addition to that, Astra Energy is 1.95 times more volatile than Smart Powerr Corp. It trades about 0.04 of its total potential returns per unit of risk. Smart Powerr Corp is currently generating about 0.07 per unit of volatility. If you would invest  72.00  in Smart Powerr Corp on December 2, 2024 and sell it today you would earn a total of  7.00  from holding Smart Powerr Corp or generate 9.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Astra Energy  vs.  Smart Powerr Corp

Astra Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, Astra Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Smart Powerr Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Powerr Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Smart Powerr reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astra Energy and Smart Powerr

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

The idea behind Astra Energy and Smart Powerr Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.