Correlation Between Stellar and Softwareone Holding

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

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

Diversification Opportunities for Stellar and Softwareone Holding

-0.29

Correlation Coefficient

Stellar  Softwareone Holding

Very good diversification

The 3 months correlation between Stellar and Softwareone is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Softwareone Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softwareone Holding 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 Softwareone Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softwareone Holding has no effect on the direction of Stellar i.e., Stellar and Softwareone Holding go up and down completely randomly.

Pair Corralation between Stellar and Softwareone Holding

Assuming the 90 days trading horizon Stellar is expected to generate 1.87 times more return on investment than Softwareone Holding. However, Stellar is 1.87 times more volatile than Softwareone Holding. It trades about 0.25 of its potential returns per unit of risk. Softwareone Holding is currently generating about -0.15 per unit of risk. If you would invest  9.33  in Stellar on October 24, 2024 and sell it today you would earn a total of  34.67  from holding Stellar or generate 371.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

Stellar  vs.  Softwareone Holding

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.

Softwareone Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Softwareone Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Stellar and Softwareone Holding

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

The idea behind Stellar and Softwareone Holding 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.