Correlation Between Astar and Step One
Can any of the company-specific risk be diversified away by investing in both Astar and Step One 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 Astar and Step One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Step One Clothing, you can compare the effects of market volatilities on Astar and Step One 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 Astar with a short position of Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Step One.
Diversification Opportunities for Astar and Step One
Weak diversification
The 3 months correlation between Astar and Step is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing and Astar 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 Astar are associated (or correlated) with Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Astar i.e., Astar and Step One go up and down completely randomly.
Pair Corralation between Astar and Step One
Assuming the 90 days trading horizon Astar is expected to generate 2.02 times more return on investment than Step One. However, Astar is 2.02 times more volatile than Step One Clothing. It trades about -0.02 of its potential returns per unit of risk. Step One Clothing is currently generating about -0.14 per unit of risk. If you would invest 6.04 in Astar on October 31, 2024 and sell it today you would lose (1.13) from holding Astar or give up 18.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.51% |
| Values | Daily Returns |
Astar vs. Step One Clothing
Performance |
| Timeline |
| Astar |
| Step One Clothing |
Astar and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Step One
The main advantage of trading using opposite Astar and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.The idea behind Astar and Step One Clothing 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.| Step One vs. BSP Financial Group | Step One vs. Bisalloy Steel Group | Step One vs. Qbe Insurance Group | Step One vs. Iron Road |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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