Correlation Between Stellar and CHINA CONCH

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

By analyzing existing cross correlation between Stellar and CHINA CH VENT, you can compare the effects of market volatilities on Stellar and CHINA CONCH 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 CHINA CONCH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and CHINA CONCH.

Diversification Opportunities for Stellar and CHINA CONCH

-0.4

Correlation Coefficient

Stellar  CHINA CONCH

Very good diversification

The 3 months correlation between Stellar and CHINA is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and CHINA CH VENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA CH VENT 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 CHINA CONCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA CH VENT has no effect on the direction of Stellar i.e., Stellar and CHINA CONCH go up and down completely randomly.

Pair Corralation between Stellar and CHINA CONCH

Assuming the 90 days trading horizon Stellar is expected to under-perform the CHINA CONCH. In addition to that, Stellar is 1.47 times more volatile than CHINA CH VENT. It trades about -0.02 of its total potential returns per unit of risk. CHINA CH VENT is currently generating about 0.05 per unit of volatility. If you would invest  83.00  in CHINA CH VENT on December 20, 2024 and sell it today you would earn a total of  7.00  from holding CHINA CH VENT or generate 8.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Stellar  vs.  CHINA CH VENT

Stellar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Stellar shareholders.

CHINA CH VENT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA CH VENT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CHINA CONCH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stellar and CHINA CONCH

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

The idea behind Stellar and CHINA CH VENT 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.