Correlation Between ST Energy and American Leisure

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

By analyzing existing cross correlation between ST Energy Transition and American Leisure Holdings, you can compare the effects of market volatilities on ST Energy and American Leisure 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 ST Energy with a short position of American Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of ST Energy and American Leisure.

Diversification Opportunities for ST Energy and American Leisure

0.0

Correlation Coefficient

ST Energy  American Leisure

Pay attention - limited upside

The 3 months correlation between STET and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ST Energy Transition and American Leisure Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Leisure Holdings and ST Energy 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 ST Energy Transition are associated (or correlated) with American Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Leisure Holdings has no effect on the direction of ST Energy i.e., ST Energy and American Leisure go up and down completely randomly.

Pair Corralation between ST Energy and American Leisure

If you would invest  0.02  in American Leisure Holdings on December 19, 2024 and sell it today you would lose (0.01) from holding American Leisure Holdings or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ST Energy Transition  vs.  American Leisure Holdings

ST Energy Transition

Risk-Adjusted Performance

Very Weak

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

American Leisure Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Leisure Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, American Leisure demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ST Energy and American Leisure

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

The idea behind ST Energy Transition and American Leisure Holdings 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.