Correlation Between Future Generation and Stellar Capital

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

By analyzing existing cross correlation between Future Generation Global and Stellar Capital Partners, you can compare the effects of market volatilities on Future Generation and Stellar Capital 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 Future Generation with a short position of Stellar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Generation and Stellar Capital.

Diversification Opportunities for Future Generation and Stellar Capital

0.0

Correlation Coefficient

Future Generation  Stellar Capital

Pay attention - limited upside

The 3 months correlation between Future and Stellar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Future Generation Global and Stellar Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar Capital Partners and Future Generation 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 Future Generation Global are associated (or correlated) with Stellar Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar Capital Partners has no effect on the direction of Future Generation i.e., Future Generation and Stellar Capital go up and down completely randomly.

Pair Corralation between Future Generation and Stellar Capital

If you would invest  142.00  in Future Generation Global on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Future Generation Global or generate 2.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Future Generation Global  vs.  Stellar Capital Partners

Future Generation Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Future Generation Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Future Generation is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Stellar Capital Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellar Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Stellar Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Future Generation and Stellar Capital

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

The idea behind Future Generation Global and Stellar Capital Partners 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.