Correlation Between Stellus Capital and Horizon Technology

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

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

Diversification Opportunities for Stellus Capital and Horizon Technology

0.91

Correlation Coefficient

Stellus Capital  Horizon Technology

Almost no diversification

The 3 months correlation between Stellus and Horizon is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Stellus Capital Investment and Horizon Technology Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Technology and Stellus Capital 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 Stellus Capital Investment are associated (or correlated) with Horizon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Technology has no effect on the direction of Stellus Capital i.e., Stellus Capital and Horizon Technology go up and down completely randomly.

Pair Corralation between Stellus Capital and Horizon Technology

Considering the 90-day investment horizon Stellus Capital is expected to generate 1.5 times less return on investment than Horizon Technology. But when comparing it to its historical volatility, Stellus Capital Investment is 1.22 times less risky than Horizon Technology. It trades about 0.08 of its potential returns per unit of risk. Horizon Technology Finance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  858.00  in Horizon Technology Finance on December 29, 2024 and sell it today you would earn a total of  84.00  from holding Horizon Technology Finance or generate 9.79% return on investment over 90 days.

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

Stellus Capital Investment  vs.  Horizon Technology Finance

Stellus Capital Inve

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stellus Capital Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Stellus Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Horizon Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Technology Finance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Horizon Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Stellus Capital and Horizon Technology

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

The idea behind Stellus Capital Investment and Horizon Technology Finance 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.