Correlation Between Stellar and C PARAN
Can any of the company-specific risk be diversified away by investing in both Stellar and C PARAN 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 C PARAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and C PARAN EN, you can compare the effects of market volatilities on Stellar and C PARAN 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 C PARAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and C PARAN.
Diversification Opportunities for Stellar and C PARAN
Very good diversification
The 3 months correlation between Stellar and ELP1 is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and C PARAN EN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C PARAN EN 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 C PARAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C PARAN EN has no effect on the direction of Stellar i.e., Stellar and C PARAN go up and down completely randomly.
Pair Corralation between Stellar and C PARAN
Assuming the 90 days trading horizon Stellar is expected to generate 4.73 times more return on investment than C PARAN. However, Stellar is 4.73 times more volatile than C PARAN EN. It trades about 0.19 of its potential returns per unit of risk. C PARAN EN is currently generating about -0.02 per unit of risk. If you would invest 9.16 in Stellar on November 2, 2024 and sell it today you would earn a total of 33.84 from holding Stellar or generate 369.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.2% |
| Values | Daily Returns |
Stellar vs. C PARAN EN
Performance |
| Timeline |
| Stellar |
| C PARAN EN |
Stellar and C PARAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and C PARAN
The main advantage of trading using opposite Stellar and C PARAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, C PARAN 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 C PARAN will offset losses from the drop in C PARAN's long position.The idea behind Stellar and C PARAN EN 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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