Correlation Between Stellar and SEAS Old

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

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

Diversification Opportunities for Stellar and SEAS Old

0.28

Correlation Coefficient

Stellar  SEAS Old

Modest diversification

The 3 months correlation between Stellar and SEAS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and SEAS Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEAS Old 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 SEAS Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEAS Old has no effect on the direction of Stellar i.e., Stellar and SEAS Old go up and down completely randomly.

Pair Corralation between Stellar and SEAS Old

If you would invest  10.00  in Stellar on October 10, 2024 and sell it today you would earn a total of  32.00  from holding Stellar or generate 320.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.79%
Values	Daily Returns

Stellar  vs.  SEAS Old

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.

SEAS Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEAS Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SEAS Old 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 SEAS Old

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

The idea behind Stellar and SEAS Old 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.