Correlation Between Stellar and Starr Peak

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

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

Diversification Opportunities for Stellar and Starr Peak

-0.31

Correlation Coefficient

Stellar  Starr Peak

Very good diversification

The 3 months correlation between Stellar and Starr is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Starr Peak Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starr Peak Exploration 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 Starr Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starr Peak Exploration has no effect on the direction of Stellar i.e., Stellar and Starr Peak go up and down completely randomly.

Pair Corralation between Stellar and Starr Peak

Assuming the 90 days trading horizon Stellar is expected to generate 1.92 times more return on investment than Starr Peak. However, Stellar is 1.92 times more volatile than Starr Peak Exploration. It trades about 0.1 of its potential returns per unit of risk. Starr Peak Exploration is currently generating about 0.0 per unit of risk. If you would invest  9.03  in Stellar on October 11, 2024 and sell it today you would earn a total of  32.97  from holding Stellar or generate 365.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.92%
Values	Daily Returns

Stellar  vs.  Starr Peak Exploration

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.

Starr Peak Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starr Peak Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Starr Peak is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Stellar and Starr Peak

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

The idea behind Stellar and Starr Peak Exploration 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.