Correlation Between Stellar and Heart Tronics

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

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

Diversification Opportunities for Stellar and Heart Tronics

0.0

Correlation Coefficient

Stellar  Heart Tronics

Pay attention - limited upside

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

Pair Corralation between Stellar and Heart Tronics

If you would invest  44.00  in Stellar on October 10, 2024 and sell it today you would lose (2.00) from holding Stellar or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Stellar  vs.  Heart Tronics

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.

Heart Tronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heart Tronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Heart Tronics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stellar and Heart Tronics

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

The idea behind Stellar and Heart Tronics 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.