Correlation Between Powell Industries and Stardust Power

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

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

Diversification Opportunities for Powell Industries and Stardust Power

0.5

Correlation Coefficient

Powell Industries  Stardust Power

Very weak diversification

The 3 months correlation between Powell and Stardust is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Powell Industries and Stardust Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stardust Power and Powell Industries 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 Powell Industries are associated (or correlated) with Stardust Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stardust Power has no effect on the direction of Powell Industries i.e., Powell Industries and Stardust Power go up and down completely randomly.

Pair Corralation between Powell Industries and Stardust Power

Given the investment horizon of 90 days Powell Industries is expected to generate 0.54 times more return on investment than Stardust Power. However, Powell Industries is 1.87 times less risky than Stardust Power. It trades about -0.07 of its potential returns per unit of risk. Stardust Power is currently generating about -0.39 per unit of risk. If you would invest  22,677  in Powell Industries on December 29, 2024 and sell it today you would lose (5,005) from holding Powell Industries or give up 22.07% of portfolio value over 90 days.

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

Powell Industries  vs.  Stardust Power

Powell Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Powell Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Stardust Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stardust Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Pair Trading with Powell Industries and Stardust Power

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

The idea behind Powell Industries and Stardust Power 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.