Correlation Between Stelar Metals and Bellevue Gold

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

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

Diversification Opportunities for Stelar Metals and Bellevue Gold

0.15

Correlation Coefficient

Stelar Metals  Bellevue Gold

Average diversification

The 3 months correlation between Stelar and Bellevue is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Stelar Metals and Bellevue Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Gold and Stelar Metals 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 Stelar Metals are associated (or correlated) with Bellevue Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Gold has no effect on the direction of Stelar Metals i.e., Stelar Metals and Bellevue Gold go up and down completely randomly.

Pair Corralation between Stelar Metals and Bellevue Gold

Assuming the 90 days trading horizon Stelar Metals is expected to generate 0.8 times more return on investment than Bellevue Gold. However, Stelar Metals is 1.25 times less risky than Bellevue Gold. It trades about -0.02 of its potential returns per unit of risk. Bellevue Gold is currently generating about -0.02 per unit of risk. If you would invest  6.60  in Stelar Metals on December 1, 2024 and sell it today you would lose (0.30) from holding Stelar Metals or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Stelar Metals  vs.  Bellevue Gold

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 comparatively stable fundamental drivers, Stelar Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Bellevue Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bellevue Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Bellevue Gold is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stelar Metals and Bellevue Gold

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

The idea behind Stelar Metals and Bellevue Gold 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.