Correlation Between Stellar and SIG Combibloc

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

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

Diversification Opportunities for Stellar and SIG Combibloc

-0.87

Correlation Coefficient

Stellar  SIG Combibloc

Pay attention - limited upside

The 3 months correlation between Stellar and SIG is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and SIG Combibloc Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIG Combibloc Group 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 SIG Combibloc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIG Combibloc Group has no effect on the direction of Stellar i.e., Stellar and SIG Combibloc go up and down completely randomly.

Pair Corralation between Stellar and SIG Combibloc

Assuming the 90 days trading horizon Stellar is expected to generate 3.5 times more return on investment than SIG Combibloc. However, Stellar is 3.5 times more volatile than SIG Combibloc Group. It trades about 0.13 of its potential returns per unit of risk. SIG Combibloc Group is currently generating about -0.01 per unit of risk. If you would invest  11.00  in Stellar on October 12, 2024 and sell it today you would earn a total of  28.00  from holding Stellar or generate 254.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	88.77%
Values	Daily Returns

Stellar  vs.  SIG Combibloc Group

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.

SIG Combibloc Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIG Combibloc Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Stellar and SIG Combibloc

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

The idea behind Stellar and SIG Combibloc Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.