Correlation Between AuthID and Stem
Can any of the company-specific risk be diversified away by investing in both AuthID and Stem 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 AuthID and Stem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between authID Inc and Stem Inc, you can compare the effects of market volatilities on AuthID and Stem 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 AuthID with a short position of Stem. Check out your portfolio center. Please also check ongoing floating volatility patterns of AuthID and Stem.
Diversification Opportunities for AuthID and Stem
Very good diversification
The 3 months correlation between AuthID and Stem is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding authID Inc and Stem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Inc and AuthID 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 authID Inc are associated (or correlated) with Stem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stem Inc has no effect on the direction of AuthID i.e., AuthID and Stem go up and down completely randomly.
Pair Corralation between AuthID and Stem
Given the investment horizon of 90 days authID Inc is expected to under-perform the Stem. But the stock apears to be less risky and, when comparing its historical volatility, authID Inc is 5.17 times less risky than Stem. The stock trades about -0.08 of its potential returns per unit of risk. The Stem Inc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Stem Inc on October 22, 2024 and sell it today you would earn a total of 38.10 from holding Stem Inc or generate 119.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
authID Inc vs. Stem Inc
Performance |
| Timeline |
| authID Inc |
| Stem Inc |
AuthID and Stem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AuthID and Stem
The main advantage of trading using opposite AuthID and Stem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AuthID position performs unexpectedly, Stem 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 Stem will offset losses from the drop in Stem's long position.| AuthID vs. Datasea | AuthID vs. Priority Technology Holdings | AuthID vs. Fuse Science | AuthID vs. Cerberus Cyber Sentinel |
| Stem vs. Palo Alto Networks | Stem vs. Crowdstrike Holdings | Stem vs. Cloudflare | Stem vs. Palantir Technologies Class |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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