Correlation Between Stelar Metals and Tamawood
Can any of the company-specific risk be diversified away by investing in both Stelar Metals and Tamawood 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 Tamawood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stelar Metals and Tamawood, you can compare the effects of market volatilities on Stelar Metals and Tamawood 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 Tamawood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelar Metals and Tamawood.
Diversification Opportunities for Stelar Metals and Tamawood
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stelar and Tamawood is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Stelar Metals and Tamawood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamawood 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 Tamawood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamawood has no effect on the direction of Stelar Metals i.e., Stelar Metals and Tamawood go up and down completely randomly.
Pair Corralation between Stelar Metals and Tamawood
Assuming the 90 days trading horizon Stelar Metals is expected to generate 81.82 times less return on investment than Tamawood. In addition to that, Stelar Metals is 2.16 times more volatile than Tamawood. It trades about 0.0 of its total potential returns per unit of risk. Tamawood is currently generating about 0.04 per unit of volatility. If you would invest 201.00 in Tamawood on September 3, 2024 and sell it today you would earn a total of 69.00 from holding Tamawood or generate 34.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stelar Metals vs. Tamawood
Performance |
| Timeline |
| Stelar Metals |
| Tamawood |
Stelar Metals and Tamawood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stelar Metals and Tamawood
The main advantage of trading using opposite Stelar Metals and Tamawood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stelar Metals position performs unexpectedly, Tamawood 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 Tamawood will offset losses from the drop in Tamawood's long position.| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals vs. Aneka Tambang Tbk |
| Tamawood vs. EVE Health Group | Tamawood vs. Retail Food Group | Tamawood vs. Stelar Metals | Tamawood vs. Health and Plant |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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