Correlation Between Green Technology and Stelar Metals

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

By analyzing existing cross correlation between Green Technology Metals and Stelar Metals, you can compare the effects of market volatilities on Green Technology and Stelar Metals 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 Green Technology with a short position of Stelar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Technology and Stelar Metals.

Diversification Opportunities for Green Technology and Stelar Metals

0.27

Correlation Coefficient

Green Technology  Stelar Metals

Modest diversification

The 3 months correlation between Green and Stelar is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Green Technology Metals and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals and Green Technology 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 Green Technology Metals are associated (or correlated) with Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Green Technology i.e., Green Technology and Stelar Metals go up and down completely randomly.

Pair Corralation between Green Technology and Stelar Metals

Assuming the 90 days trading horizon Green Technology Metals is expected to under-perform the Stelar Metals. In addition to that, Green Technology is 2.44 times more volatile than Stelar Metals. It trades about -0.04 of its total potential returns per unit of risk. Stelar Metals is currently generating about -0.08 per unit of volatility. If you would invest  7.10  in Stelar Metals on December 4, 2024 and sell it today you would lose (0.90) from holding Stelar Metals or give up 12.68% of portfolio value over 90 days.

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

Green Technology Metals  vs.  Stelar Metals

Green Technology Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Green Technology Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Stelar Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stelar Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Green Technology and Stelar Metals

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

The idea behind Green Technology Metals and Stelar Metals 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.