Correlation Between Stelar Metals and Ecofibre
Can any of the company-specific risk be diversified away by investing in both Stelar Metals and Ecofibre 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 Stelar Metals and Ecofibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stelar Metals and Ecofibre, you can compare the effects of market volatilities on Stelar Metals and Ecofibre 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 Stelar Metals with a short position of Ecofibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelar Metals and Ecofibre.
Diversification Opportunities for Stelar Metals and Ecofibre
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Stelar and Ecofibre is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Stelar Metals and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre and Stelar Metals 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 Stelar Metals are associated (or correlated) with Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of Stelar Metals i.e., Stelar Metals and Ecofibre go up and down completely randomly.
Pair Corralation between Stelar Metals and Ecofibre
Assuming the 90 days trading horizon Stelar Metals is expected to under-perform the Ecofibre. But the stock apears to be less risky and, when comparing its historical volatility, Stelar Metals is 2.47 times less risky than Ecofibre. The stock trades about -0.07 of its potential returns per unit of risk. The Ecofibre is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Ecofibre on October 12, 2024 and sell it today you would earn a total of 0.20 from holding Ecofibre or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stelar Metals vs. Ecofibre
Performance |
| Timeline |
| Stelar Metals |
| Ecofibre |
Stelar Metals and Ecofibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stelar Metals and Ecofibre
The main advantage of trading using opposite Stelar Metals and Ecofibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stelar Metals position performs unexpectedly, Ecofibre 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 Ecofibre will offset losses from the drop in Ecofibre's long position.| Stelar Metals vs. Sandon Capital Investments | Stelar Metals vs. Falcon Metals | Stelar Metals vs. Carlton Investments | Stelar Metals vs. Sky Metals |
| Ecofibre vs. Stelar Metals | Ecofibre vs. Hammer Metals | Ecofibre vs. Everest Metals | Ecofibre vs. Collins Foods |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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