Correlation Between Stem and Telos Corp

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

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

Diversification Opportunities for Stem and Telos Corp

0.12

Correlation Coefficient

Stem  Telos Corp

Average diversification

The 3 months correlation between Stem and Telos is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Stem Inc and Telos Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telos Corp and Stem 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 Stem Inc are associated (or correlated) with Telos Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telos Corp has no effect on the direction of Stem i.e., Stem and Telos Corp go up and down completely randomly.

Pair Corralation between Stem and Telos Corp

Given the investment horizon of 90 days Stem Inc is expected to under-perform the Telos Corp. In addition to that, Stem is 1.59 times more volatile than Telos Corp. It trades about -0.14 of its total potential returns per unit of risk. Telos Corp is currently generating about 0.12 per unit of volatility. If you would invest  325.00  in Telos Corp on September 23, 2024 and sell it today you would earn a total of  25.00  from holding Telos Corp or generate 7.69% return on investment over 90 days.

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

Stem Inc  vs.  Telos Corp

Stem Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stem Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Stem displayed solid returns over the last few months and may actually be approaching a breakup point.

Telos Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Stem and Telos Corp

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

The idea behind Stem Inc and Telos Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.