Correlation Between Stellar and Sui
Can any of the company-specific risk be diversified away by investing in both Stellar and Sui 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 Sui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Sui, you can compare the effects of market volatilities on Stellar and Sui 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 Sui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Sui.
Diversification Opportunities for Stellar and Sui
Weak diversification
The 3 months correlation between Stellar and Sui is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Sui in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sui 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 Sui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sui has no effect on the direction of Stellar i.e., Stellar and Sui go up and down completely randomly.
Pair Corralation between Stellar and Sui
Assuming the 90 days trading horizon Stellar is expected to generate 0.88 times more return on investment than Sui. However, Stellar is 1.14 times less risky than Sui. It trades about -0.29 of its potential returns per unit of risk. Sui is currently generating about -0.28 per unit of risk. If you would invest 49.00 in Stellar on November 18, 2024 and sell it today you would lose (14.00) from holding Stellar or give up 28.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stellar vs. Sui
Performance |
| Timeline |
| Stellar |
| Sui |
Stellar and Sui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Sui
The main advantage of trading using opposite Stellar and Sui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, Sui 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 Sui will offset losses from the drop in Sui's long position.The idea behind Stellar and Sui 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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