Correlation Between Stardust Power and Alta Equipment

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

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

Diversification Opportunities for Stardust Power and Alta Equipment

-0.56

Correlation Coefficient

Stardust Power  Alta Equipment

Excellent diversification

The 3 months correlation between Stardust and Alta is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Stardust Power and Alta Equipment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Equipment Group and Stardust 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 Stardust Power are associated (or correlated) with Alta Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Equipment Group has no effect on the direction of Stardust Power i.e., Stardust Power and Alta Equipment go up and down completely randomly.

Pair Corralation between Stardust Power and Alta Equipment

Assuming the 90 days horizon Stardust Power is expected to generate 1.07 times less return on investment than Alta Equipment. In addition to that, Stardust Power is 4.3 times more volatile than Alta Equipment Group. It trades about 0.03 of its total potential returns per unit of risk. Alta Equipment Group is currently generating about 0.12 per unit of volatility. If you would invest  607.00  in Alta Equipment Group on October 24, 2024 and sell it today you would earn a total of  158.00  from holding Alta Equipment Group or generate 26.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	74.58%
Values	Daily Returns

Stardust Power  vs.  Alta Equipment Group

Stardust Power

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stardust Power are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Stardust Power showed solid returns over the last few months and may actually be approaching a breakup point.

Alta Equipment Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alta Equipment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stardust Power and Alta Equipment

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

The idea behind Stardust Power and Alta Equipment Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..