Correlation Between Step One and Computershare

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

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

Diversification Opportunities for Step One and Computershare

-0.8

Correlation Coefficient

Step One  Computershare

Pay attention - limited upside

The 3 months correlation between Step and Computershare is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Step One Clothing and Computershare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare and Step One 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 Step One Clothing are associated (or correlated) with Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare has no effect on the direction of Step One i.e., Step One and Computershare go up and down completely randomly.

Pair Corralation between Step One and Computershare

Assuming the 90 days trading horizon Step One is expected to generate 2.54 times less return on investment than Computershare. In addition to that, Step One is 1.85 times more volatile than Computershare. It trades about 0.05 of its total potential returns per unit of risk. Computershare is currently generating about 0.24 per unit of volatility. If you would invest  3,045  in Computershare on September 18, 2024 and sell it today you would earn a total of  251.00  from holding Computershare or generate 8.24% return on investment over 90 days.

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

Step One Clothing  vs.  Computershare

Step One Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Step One Clothing 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.

Computershare

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Computershare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Step One and Computershare

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

The idea behind Step One Clothing and Computershare 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.