Correlation Between Stellar and Aces Electronics
Can any of the company-specific risk be diversified away by investing in both Stellar and Aces Electronics 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 Stellar and Aces Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Aces Electronics Co, you can compare the effects of market volatilities on Stellar and Aces Electronics 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 Stellar with a short position of Aces Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Aces Electronics.
Diversification Opportunities for Stellar and Aces Electronics
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stellar and Aces is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Aces Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aces Electronics and Stellar 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 Stellar are associated (or correlated) with Aces Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aces Electronics has no effect on the direction of Stellar i.e., Stellar and Aces Electronics go up and down completely randomly.
Pair Corralation between Stellar and Aces Electronics
Assuming the 90 days trading horizon Stellar is expected to generate 5.36 times more return on investment than Aces Electronics. However, Stellar is 5.36 times more volatile than Aces Electronics Co. It trades about -0.02 of its potential returns per unit of risk. Aces Electronics Co is currently generating about -0.32 per unit of risk. If you would invest 43.00 in Stellar on October 12, 2024 and sell it today you would lose (4.00) from holding Stellar or give up 9.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stellar vs. Aces Electronics Co
Performance |
| Timeline |
| Stellar |
| Aces Electronics |
Stellar and Aces Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Aces Electronics
The main advantage of trading using opposite Stellar and Aces Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, Aces Electronics 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 Aces Electronics will offset losses from the drop in Aces Electronics' long position.The idea behind Stellar and Aces Electronics Co 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.| Aces Electronics vs. Chant Sincere Co | Aces Electronics vs. Altek Corp | Aces Electronics vs. Jentech Precision Industrial | Aces Electronics vs. Lotes Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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