Correlation Between ST Energy and TransAKT

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

Diversification Opportunities for ST Energy and TransAKT

0.09

Correlation Coefficient

ST Energy  TransAKT

Significant diversification

The 3 months correlation between STET and TransAKT is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ST Energy Transition and TransAKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAKT 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 TransAKT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAKT has no effect on the direction of ST Energy i.e., ST Energy and TransAKT go up and down completely randomly.

Pair Corralation between ST Energy and TransAKT

If you would invest  0.27  in TransAKT on October 26, 2024 and sell it today you would earn a total of  0.00  from holding TransAKT or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

ST Energy Transition  vs.  TransAKT

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.

TransAKT

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TransAKT are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, TransAKT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ST Energy and TransAKT

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

The idea behind ST Energy Transition and TransAKT 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.