Correlation Between Stag Industrial and Rock Tech

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

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

Diversification Opportunities for Stag Industrial and Rock Tech

-0.19

Correlation Coefficient

Stag Industrial  Rock Tech

Good diversification

The 3 months correlation between Stag and Rock is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Stag Industrial and Rock Tech Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rock Tech Lithium and Stag Industrial 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 Stag Industrial are associated (or correlated) with Rock Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rock Tech Lithium has no effect on the direction of Stag Industrial i.e., Stag Industrial and Rock Tech go up and down completely randomly.

Pair Corralation between Stag Industrial and Rock Tech

Assuming the 90 days trading horizon Stag Industrial is expected to generate 5.49 times less return on investment than Rock Tech. But when comparing it to its historical volatility, Stag Industrial is 7.04 times less risky than Rock Tech. It trades about 0.18 of its potential returns per unit of risk. Rock Tech Lithium is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  69.00  in Rock Tech Lithium on October 23, 2024 and sell it today you would earn a total of  9.00  from holding Rock Tech Lithium or generate 13.04% return on investment over 90 days.

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

Stag Industrial  vs.  Rock Tech Lithium

Stag Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rock Tech Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rock Tech Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Rock Tech is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Stag Industrial and Rock Tech

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

The idea behind Stag Industrial and Rock Tech Lithium 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.