Correlation Between Comcast Corp and Stem Holdings

Can any of the company-specific risk be diversified away by investing in both Comcast Corp and Stem Holdings 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 Comcast Corp and Stem Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Comcast Corp and Stem Holdings, you can compare the effects of market volatilities on Comcast Corp and Stem Holdings 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 Comcast Corp with a short position of Stem Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comcast Corp and Stem Holdings.

Diversification Opportunities for Comcast Corp and Stem Holdings

-0.02

Correlation Coefficient

Comcast Corp  Stem Holdings

Good diversification

The 3 months correlation between Comcast and Stem is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Comcast Corp and Stem Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Holdings and Comcast Corp 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 Comcast Corp are associated (or correlated) with Stem Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stem Holdings has no effect on the direction of Comcast Corp i.e., Comcast Corp and Stem Holdings go up and down completely randomly.

Pair Corralation between Comcast Corp and Stem Holdings

Assuming the 90 days horizon Comcast Corp is expected to under-perform the Stem Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Comcast Corp is 166.98 times less risky than Stem Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The Stem Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Stem Holdings on May 2, 2025 and sell it today you would earn a total of  0.00  from holding Stem Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Comcast Corp  vs.  Stem Holdings

Comcast Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Comcast Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Comcast Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Stem Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stem Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile primary indicators, Stem Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Comcast Corp and Stem Holdings

The main advantage of trading using opposite Comcast Corp and Stem Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comcast Corp position performs unexpectedly, Stem Holdings 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 Stem Holdings will offset losses from the drop in Stem Holdings' long position.

The idea behind Comcast Corp and Stem Holdings 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.