Correlation Between Stellar and Aspo Oyj

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

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

Diversification Opportunities for Stellar and Aspo Oyj

-0.75

Correlation Coefficient

Stellar  Aspo Oyj

Pay attention - limited upside

The 3 months correlation between Stellar and Aspo is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Aspo Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspo Oyj 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 Aspo Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspo Oyj has no effect on the direction of Stellar i.e., Stellar and Aspo Oyj go up and down completely randomly.

Pair Corralation between Stellar and Aspo Oyj

Assuming the 90 days trading horizon Stellar is expected to generate 12.46 times more return on investment than Aspo Oyj. However, Stellar is 12.46 times more volatile than Aspo Oyj. It trades about 0.31 of its potential returns per unit of risk. Aspo Oyj is currently generating about -0.15 per unit of risk. If you would invest  10.00  in Stellar on October 9, 2024 and sell it today you would earn a total of  34.00  from holding Stellar or generate 340.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

Stellar  vs.  Aspo Oyj

Stellar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 20 (%) 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.

Aspo Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspo Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Stellar and Aspo Oyj

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

The idea behind Stellar and Aspo Oyj 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.