Correlation Between Stellar and Elcom International

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

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

Diversification Opportunities for Stellar and Elcom International

0.0

Correlation Coefficient

Stellar  Elcom International

Pay attention - limited upside

The 3 months correlation between Stellar and Elcom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Elcom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcom International 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 Elcom International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcom International has no effect on the direction of Stellar i.e., Stellar and Elcom International go up and down completely randomly.

Pair Corralation between Stellar and Elcom International

If you would invest  9.33  in Stellar on October 24, 2024 and sell it today you would earn a total of  34.67  from holding Stellar or generate 371.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Stellar  vs.  Elcom International

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.

Elcom International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elcom International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Elcom International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Stellar and Elcom International

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

The idea behind Stellar and Elcom International 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.