Correlation Between Stellar and Power Ledger

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

By analyzing existing cross correlation between Stellar and Power Ledger, you can compare the effects of market volatilities on Stellar and Power Ledger 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 Power Ledger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Power Ledger.

Diversification Opportunities for Stellar and Power Ledger

0.61

Correlation Coefficient

Stellar  Power Ledger

Poor diversification

The 3 months correlation between Stellar and Power is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Power Ledger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Ledger 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 Power Ledger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Ledger has no effect on the direction of Stellar i.e., Stellar and Power Ledger go up and down completely randomly.

Pair Corralation between Stellar and Power Ledger

Assuming the 90 days trading horizon Stellar is expected to generate 1.51 times more return on investment than Power Ledger. However, Stellar is 1.51 times more volatile than Power Ledger. It trades about 0.22 of its potential returns per unit of risk. Power Ledger is currently generating about 0.06 per unit of risk. If you would invest  10.00  in Stellar on August 23, 2024 and sell it today you would earn a total of  15.00  from holding Stellar or generate 150.0% return on investment over 90 days.

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

Stellar  vs.  Power Ledger

Stellar

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Power Ledger

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Power Ledger are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Power Ledger exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stellar and Power Ledger

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

The idea behind Stellar and Power Ledger 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.