Correlation Between Stellar and Puffer

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

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

Diversification Opportunities for Stellar and Puffer

0.29

Correlation Coefficient

Stellar  Puffer

Modest diversification

The 3 months correlation between Stellar and Puffer is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Puffer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puffer 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 Puffer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puffer has no effect on the direction of Stellar i.e., Stellar and Puffer go up and down completely randomly.

Pair Corralation between Stellar and Puffer

Assuming the 90 days trading horizon Stellar is expected to generate 0.61 times more return on investment than Puffer. However, Stellar is 1.63 times less risky than Puffer. It trades about 0.13 of its potential returns per unit of risk. Puffer is currently generating about 0.06 per unit of risk. If you would invest  26.00  in Stellar on May 5, 2025 and sell it today you would earn a total of  12.00  from holding Stellar or generate 46.15% 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.  Puffer

Stellar

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 10 (%) 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.

Puffer

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Puffer are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Puffer sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stellar and Puffer

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

The idea behind Stellar and Puffer 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.