Correlation Between Stellar and REDLANG
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By analyzing existing cross correlation between Stellar and REDLANG, you can compare the effects of market volatilities on Stellar and REDLANG 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 REDLANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and REDLANG.
Diversification Opportunities for Stellar and REDLANG
Modest diversification
The 3 months correlation between Stellar and REDLANG is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and REDLANG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDLANG 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 REDLANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDLANG has no effect on the direction of Stellar i.e., Stellar and REDLANG go up and down completely randomly.
Pair Corralation between Stellar and REDLANG
Assuming the 90 days trading horizon Stellar is expected to generate 0.83 times more return on investment than REDLANG. However, Stellar is 1.21 times less risky than REDLANG. It trades about 0.11 of its potential returns per unit of risk. REDLANG is currently generating about 0.02 per unit of risk. If you would invest 23.00 in Stellar on November 18, 2024 and sell it today you would earn a total of 12.00 from holding Stellar or generate 52.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stellar vs. REDLANG
Performance |
| Timeline |
| Stellar |
| REDLANG |
Stellar and REDLANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and REDLANG
The main advantage of trading using opposite Stellar and REDLANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, REDLANG 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 REDLANG will offset losses from the drop in REDLANG's long position.The idea behind Stellar and REDLANG 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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