Correlation Between Celestia and NEM

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

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

Diversification Opportunities for Celestia and NEM

0.84

Correlation Coefficient

Celestia  NEM

Very poor diversification

The 3 months correlation between Celestia and NEM is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Celestia and NEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEM and Celestia 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 Celestia are associated (or correlated) with NEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEM has no effect on the direction of Celestia i.e., Celestia and NEM go up and down completely randomly.

Pair Corralation between Celestia and NEM

Assuming the 90 days trading horizon Celestia is expected to generate 1.37 times more return on investment than NEM. However, Celestia is 1.37 times more volatile than NEM. It trades about 0.18 of its potential returns per unit of risk. NEM is currently generating about 0.24 per unit of risk. If you would invest  404.00  in Celestia on September 4, 2024 and sell it today you would earn a total of  367.00  from holding Celestia or generate 90.84% return on investment over 90 days.

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

Celestia  vs.  NEM

Celestia

Risk-Adjusted Performance

13 of 100

Good

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

NEM

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NEM are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, NEM exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celestia and NEM

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

The idea behind Celestia and NEM 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .