Correlation Between Telos Corp and Stem

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

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

Diversification Opportunities for Telos Corp and Stem

0.12

Correlation Coefficient

Telos Corp  Stem

Average diversification

The 3 months correlation between Telos and Stem is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Telos Corp and Stem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Inc and Telos Corp 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 Telos Corp are associated (or correlated) with Stem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stem Inc has no effect on the direction of Telos Corp i.e., Telos Corp and Stem go up and down completely randomly.

Pair Corralation between Telos Corp and Stem

Considering the 90-day investment horizon Telos Corp is expected to generate 0.63 times more return on investment than Stem. However, Telos Corp is 1.59 times less risky than Stem. It trades about 0.12 of its potential returns per unit of risk. Stem Inc is currently generating about -0.14 per unit of risk. If you would invest  325.00  in Telos Corp on September 23, 2024 and sell it today you would earn a total of  25.00  from holding Telos Corp or generate 7.69% return on investment over 90 days.

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

Telos Corp  vs.  Stem Inc

Telos Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Stem Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stem Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Stem displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telos Corp and Stem

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

The idea behind Telos Corp and Stem Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.