Correlation Between ST Energy and Churchill Capital

Can any of the company-specific risk be diversified away by investing in both ST Energy and Churchill Capital 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 Churchill Capital 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 Churchill Capital V, you can compare the effects of market volatilities on ST Energy and Churchill Capital 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 Churchill Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ST Energy and Churchill Capital.

Diversification Opportunities for ST Energy and Churchill Capital

0.92

Correlation Coefficient

ST Energy  Churchill Capital

Almost no diversification

The 3 months correlation between STET and Churchill is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ST Energy Transition and Churchill Capital V in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Capital 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 Churchill Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Capital has no effect on the direction of ST Energy i.e., ST Energy and Churchill Capital go up and down completely randomly.

Pair Corralation between ST Energy and Churchill Capital

If you would invest  1,021  in Churchill Capital V on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Churchill Capital V or generate 0.0% return on investment over 90 days.

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

ST Energy Transition  vs.  Churchill Capital V

ST Energy Transition

Risk-Adjusted Performance

0 of 100

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.

Churchill Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Churchill Capital V has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Churchill Capital is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ST Energy and Churchill Capital

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

The idea behind ST Energy Transition and Churchill Capital V 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.