Correlation Between Pioneer Power and Stardust Power

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

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

Diversification Opportunities for Pioneer Power and Stardust Power

0.91

Correlation Coefficient

Pioneer Power  Stardust Power

Almost no diversification

The 3 months correlation between Pioneer and Stardust is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Power Solutions and Stardust Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stardust Power and Pioneer Power 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 Pioneer Power Solutions 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 Pioneer Power i.e., Pioneer Power and Stardust Power go up and down completely randomly.

Pair Corralation between Pioneer Power and Stardust Power

Given the investment horizon of 90 days Pioneer Power Solutions is expected to generate 0.47 times more return on investment than Stardust Power. However, Pioneer Power Solutions is 2.11 times less risky than Stardust Power. It trades about -0.09 of its potential returns per unit of risk. Stardust Power is currently generating about -0.4 per unit of risk. If you would invest  386.00  in Pioneer Power Solutions on November 28, 2024 and sell it today you would lose (25.00) from holding Pioneer Power Solutions or give up 6.48% of portfolio value over 90 days.

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

Pioneer Power Solutions  vs.  Stardust Power

Pioneer Power Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pioneer Power Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Pioneer Power and Stardust Power

The main advantage of trading using opposite Pioneer Power and Stardust Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer Power 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 Pioneer Power Solutions 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.