Correlation Between Stellar and APAC Old
Can any of the company-specific risk be diversified away by investing in both Stellar and APAC Old 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 APAC Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and APAC Old, you can compare the effects of market volatilities on Stellar and APAC Old 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 APAC Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and APAC Old.
Diversification Opportunities for Stellar and APAC Old
Pay attention - limited upside
The 3 months correlation between Stellar and APAC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and APAC Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APAC Old 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 APAC Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APAC Old has no effect on the direction of Stellar i.e., Stellar and APAC Old go up and down completely randomly.
Pair Corralation between Stellar and APAC Old
Assuming the 90 days trading horizon Stellar is expected to generate 31.03 times more return on investment than APAC Old. However, Stellar is 31.03 times more volatile than APAC Old. It trades about 0.1 of its potential returns per unit of risk. APAC Old is currently generating about 0.15 per unit of risk. If you would invest 9.29 in Stellar on October 25, 2024 and sell it today you would earn a total of 33.71 from holding Stellar or generate 362.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 39.86% |
| Values | Daily Returns |
Stellar vs. APAC Old
Performance |
| Timeline |
| Stellar |
| APAC Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Stellar and APAC Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and APAC Old
The main advantage of trading using opposite Stellar and APAC Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, APAC Old 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 APAC Old will offset losses from the drop in APAC Old's long position.The idea behind Stellar and APAC Old 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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