Correlation Between Stellar and Archer

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

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

Diversification Opportunities for Stellar and Archer

0.11

Correlation Coefficient

Stellar  Archer

Average diversification

The 3 months correlation between Stellar and Archer is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Archer Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Limited 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 Archer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Limited has no effect on the direction of Stellar i.e., Stellar and Archer go up and down completely randomly.

Pair Corralation between Stellar and Archer

Assuming the 90 days trading horizon Stellar is expected to generate 11.69 times less return on investment than Archer. In addition to that, Stellar is 3.17 times more volatile than Archer Limited. It trades about 0.01 of its total potential returns per unit of risk. Archer Limited is currently generating about 0.29 per unit of volatility. If you would invest  2,385  in Archer Limited on October 10, 2024 and sell it today you would earn a total of  311.00  from holding Archer Limited or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

Stellar  vs.  Archer Limited

Stellar

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 19 (%) 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.

Archer Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Archer disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stellar and Archer

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

The idea behind Stellar and Archer Limited 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.