Correlation Between Stelar Metals and Green Technology

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

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

Diversification Opportunities for Stelar Metals and Green Technology

0.85

Correlation Coefficient

Stelar Metals  Green Technology

Very poor diversification

The 3 months correlation between Stelar and Green is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Stelar Metals and Green Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Technology Metals 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 Green Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Technology Metals has no effect on the direction of Stelar Metals i.e., Stelar Metals and Green Technology go up and down completely randomly.

Pair Corralation between Stelar Metals and Green Technology

Assuming the 90 days trading horizon Stelar Metals is expected to generate 0.47 times more return on investment than Green Technology. However, Stelar Metals is 2.11 times less risky than Green Technology. It trades about -0.01 of its potential returns per unit of risk. Green Technology Metals is currently generating about -0.11 per unit of risk. If you would invest  7.10  in Stelar Metals on September 13, 2024 and sell it today you would lose (0.10) from holding Stelar Metals or give up 1.41% of portfolio value over 90 days.

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

Stelar Metals  vs.  Green Technology Metals

Stelar Metals

Risk-Adjusted Performance

0 of 100

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.

Green Technology Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Technology Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Stelar Metals and Green Technology

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

The idea behind Stelar Metals and Green Technology Metals 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..