Correlation Between Stellar and Kngt Clb

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

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

Diversification Opportunities for Stellar and Kngt Clb

0.8

Correlation Coefficient

Stellar  Kngt Clb

Very poor diversification

The 3 months correlation between Stellar and Kngt is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Kngt Clb Larg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kngt Clb Larg 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 Kngt Clb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kngt Clb Larg has no effect on the direction of Stellar i.e., Stellar and Kngt Clb go up and down completely randomly.

Pair Corralation between Stellar and Kngt Clb

Assuming the 90 days trading horizon Stellar is expected to generate 7.95 times more return on investment than Kngt Clb. However, Stellar is 7.95 times more volatile than Kngt Clb Larg. It trades about 0.14 of its potential returns per unit of risk. Kngt Clb Larg is currently generating about 0.1 per unit of risk. If you would invest  11.00  in Stellar on October 9, 2024 and sell it today you would earn a total of  31.00  from holding Stellar or generate 281.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	88.65%
Values	Daily Returns

Stellar  vs.  Kngt Clb Larg

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.

Kngt Clb Larg

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kngt Clb Larg are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Kngt Clb is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stellar and Kngt Clb

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

The idea behind Stellar and Kngt Clb Larg 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.