Correlation Between Stellar and Y Optics

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

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

Diversification Opportunities for Stellar and Y Optics

-0.87

Correlation Coefficient

Stellar  Y Optics

Pay attention - limited upside

The 3 months correlation between Stellar and 066430 is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Y Optics Manufacture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Y Optics Manufacture and Stellar 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 Stellar are associated (or correlated) with Y Optics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Y Optics Manufacture has no effect on the direction of Stellar i.e., Stellar and Y Optics go up and down completely randomly.

Pair Corralation between Stellar and Y Optics

Assuming the 90 days trading horizon Stellar is expected to under-perform the Y Optics. In addition to that, Stellar is 3.4 times more volatile than Y Optics Manufacture Co. It trades about -0.03 of its total potential returns per unit of risk. Y Optics Manufacture Co is currently generating about 0.19 per unit of volatility. If you would invest  49,300  in Y Optics Manufacture Co on October 11, 2024 and sell it today you would earn a total of  4,400  from holding Y Optics Manufacture Co or generate 8.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

Stellar  vs.  Y Optics Manufacture Co

Stellar

Risk-Adjusted Performance

18 of 100

Solid

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

Y Optics Manufacture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Y Optics Manufacture Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Y Optics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stellar and Y Optics

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

The idea behind Stellar and Y Optics Manufacture Co 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.