Correlation Between Astar and 26442RAB7

Can any of the company-specific risk be diversified away by investing in both Astar and 26442RAB7 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 Astar and 26442RAB7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astar and DUKE ENERGY PROGRESS, you can compare the effects of market volatilities on Astar and 26442RAB7 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 Astar with a short position of 26442RAB7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and 26442RAB7.

Diversification Opportunities for Astar and 26442RAB7

-0.39

Correlation Coefficient

Astar  26442RAB7

Very good diversification

The 3 months correlation between Astar and 26442RAB7 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Astar and DUKE ENERGY PROGRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY PROGRESS and Astar 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 Astar are associated (or correlated) with 26442RAB7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY PROGRESS has no effect on the direction of Astar i.e., Astar and 26442RAB7 go up and down completely randomly.

Pair Corralation between Astar and 26442RAB7

Assuming the 90 days trading horizon Astar is expected to generate 4.2 times more return on investment than 26442RAB7. However, Astar is 4.2 times more volatile than DUKE ENERGY PROGRESS. It trades about 0.02 of its potential returns per unit of risk. DUKE ENERGY PROGRESS is currently generating about 0.0 per unit of risk. If you would invest  5.48  in Astar on October 25, 2024 and sell it today you would lose (0.14) from holding Astar or give up 2.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Astar  vs.  DUKE ENERGY PROGRESS

Astar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

DUKE ENERGY PROGRESS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE ENERGY PROGRESS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442RAB7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astar and 26442RAB7

The main advantage of trading using opposite Astar and 26442RAB7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, 26442RAB7 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 26442RAB7 will offset losses from the drop in 26442RAB7's long position.

The idea behind Astar and DUKE ENERGY PROGRESS 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..