Correlation Between Stacks and Astar

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

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

Diversification Opportunities for Stacks and Astar

0.99

Correlation Coefficient

Stacks  Astar

No risk reduction

The 3 months correlation between Stacks and Astar is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Stacks and Astar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astar and Stacks 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 Stacks are associated (or correlated) with Astar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astar has no effect on the direction of Stacks i.e., Stacks and Astar go up and down completely randomly.

Pair Corralation between Stacks and Astar

Assuming the 90 days trading horizon Stacks is expected to under-perform the Astar. In addition to that, Stacks is 1.21 times more volatile than Astar. It trades about -0.2 of its total potential returns per unit of risk. Astar is currently generating about -0.19 per unit of volatility. If you would invest  5.89  in Astar on December 30, 2024 and sell it today you would lose (2.90) from holding Astar or give up 49.24% of portfolio value over 90 days.

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

Stacks  vs.  Astar

Stacks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stacks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Stacks shareholders.

Astar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Astar shareholders.

Pair Trading with Stacks and Astar

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

The idea behind Stacks and Astar 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.