Correlation Between SPACE and Stellar
Can any of the company-specific risk be diversified away by investing in both SPACE and Stellar 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 SPACE and Stellar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and Stellar, you can compare the effects of market volatilities on SPACE and Stellar 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 SPACE with a short position of Stellar. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and Stellar.
Diversification Opportunities for SPACE and Stellar
Very poor diversification
The 3 months correlation between SPACE and Stellar is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Stellar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar and SPACE 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 SPACE are associated (or correlated) with Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar has no effect on the direction of SPACE i.e., SPACE and Stellar go up and down completely randomly.
Pair Corralation between SPACE and Stellar
Assuming the 90 days horizon SPACE is expected to generate 15.77 times more return on investment than Stellar. However, SPACE is 15.77 times more volatile than Stellar. It trades about 0.16 of its potential returns per unit of risk. Stellar is currently generating about 0.16 per unit of risk. If you would invest 2.76 in SPACE on September 1, 2024 and sell it today you would earn a total of 53.24 from holding SPACE or generate 1928.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.48% |
| Values | Daily Returns |
SPACE vs. Stellar
Performance |
| Timeline |
| SPACE |
| Stellar |
SPACE and Stellar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and Stellar
The main advantage of trading using opposite SPACE and Stellar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE position performs unexpectedly, Stellar 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 Stellar will offset losses from the drop in Stellar's long position.The idea behind SPACE and Stellar 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Transaction History View history of all your transactions and understand their impact on performance |