Correlation Between Stelar Metals and EROAD
Can any of the company-specific risk be diversified away by investing in both Stelar Metals and EROAD 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 EROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stelar Metals and EROAD, you can compare the effects of market volatilities on Stelar Metals and EROAD 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 EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelar Metals and EROAD.
Diversification Opportunities for Stelar Metals and EROAD
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stelar and EROAD is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stelar Metals and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD 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 EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Stelar Metals i.e., Stelar Metals and EROAD go up and down completely randomly.
Pair Corralation between Stelar Metals and EROAD
Assuming the 90 days trading horizon Stelar Metals is expected to generate 0.85 times more return on investment than EROAD. However, Stelar Metals is 1.18 times less risky than EROAD. It trades about -0.03 of its potential returns per unit of risk. EROAD is currently generating about -0.04 per unit of risk. If you would invest 6.40 in Stelar Metals on November 28, 2024 and sell it today you would lose (0.10) from holding Stelar Metals or give up 1.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stelar Metals vs. EROAD
Performance |
| Timeline |
| Stelar Metals |
| EROAD |
Stelar Metals and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stelar Metals and EROAD
The main advantage of trading using opposite Stelar Metals and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stelar Metals position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.| Stelar Metals vs. Step One Clothing | Stelar Metals vs. Aussie Broadband | Stelar Metals vs. Hutchison Telecommunications | Stelar Metals vs. Collins Foods |
| EROAD vs. Infomedia | EROAD vs. Aristocrat Leisure | EROAD vs. Hutchison Telecommunications | EROAD vs. Ainsworth Game Technology |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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