Correlation Between Stellar and AECI

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

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

Diversification Opportunities for Stellar and AECI

-0.79

Correlation Coefficient

Stellar  AECI

Pay attention - limited upside

The 3 months correlation between Stellar and AECI is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and AECI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECI 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 AECI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECI has no effect on the direction of Stellar i.e., Stellar and AECI go up and down completely randomly.

Pair Corralation between Stellar and AECI

Assuming the 90 days trading horizon Stellar is expected to under-perform the AECI. In addition to that, Stellar is 9.53 times more volatile than AECI. It trades about -0.06 of its total potential returns per unit of risk. AECI is currently generating about 0.09 per unit of volatility. If you would invest  145,000  in AECI on December 22, 2024 and sell it today you would earn a total of  5,000  from holding AECI or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Stellar  vs.  AECI

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 unsteady performance in the last few months, the Crypto's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Stellar shareholders.

AECI

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AECI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AECI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stellar and AECI

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

The idea behind Stellar and AECI 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.