Correlation Between Cemtrex and Stem
Can any of the company-specific risk be diversified away by investing in both Cemtrex 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 Cemtrex and Stem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cemtrex and Stem Inc, you can compare the effects of market volatilities on Cemtrex 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 Cemtrex with a short position of Stem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cemtrex and Stem.
Diversification Opportunities for Cemtrex and Stem
Significant diversification
The 3 months correlation between Cemtrex and Stem is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cemtrex and Stem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Inc and Cemtrex 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 Cemtrex 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 Cemtrex i.e., Cemtrex and Stem go up and down completely randomly.
Pair Corralation between Cemtrex and Stem
Given the investment horizon of 90 days Cemtrex is expected to under-perform the Stem. In addition to that, Cemtrex is 1.67 times more volatile than Stem Inc. It trades about -0.22 of its total potential returns per unit of risk. Stem Inc is currently generating about -0.16 per unit of volatility. If you would invest 57.00 in Stem Inc on August 28, 2024 and sell it today you would lose (17.00) from holding Stem Inc or give up 29.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cemtrex vs. Stem Inc
Performance |
| Timeline |
| Cemtrex |
| Stem Inc |
Cemtrex and Stem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cemtrex and Stem
The main advantage of trading using opposite Cemtrex and Stem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cemtrex 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.The idea behind Cemtrex and Stem Inc 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.| Stem vs. Palo Alto Networks | Stem vs. Crowdstrike Holdings | Stem vs. Cloudflare | Stem vs. Palantir Technologies |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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