Correlation Between Space Shuttle and Camellia Metal

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

By analyzing existing cross correlation between Space Shuttle Hi Tech and Camellia Metal Co, you can compare the effects of market volatilities on Space Shuttle and Camellia Metal 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 Space Shuttle with a short position of Camellia Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Space Shuttle and Camellia Metal.

Diversification Opportunities for Space Shuttle and Camellia Metal

0.73

Correlation Coefficient

Space Shuttle  Camellia Metal

Poor diversification

The 3 months correlation between Space and Camellia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Space Shuttle Hi Tech and Camellia Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camellia Metal and Space Shuttle 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 Space Shuttle Hi Tech are associated (or correlated) with Camellia Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camellia Metal has no effect on the direction of Space Shuttle i.e., Space Shuttle and Camellia Metal go up and down completely randomly.

Pair Corralation between Space Shuttle and Camellia Metal

Assuming the 90 days trading horizon Space Shuttle Hi Tech is expected to under-perform the Camellia Metal. But the stock apears to be less risky and, when comparing its historical volatility, Space Shuttle Hi Tech is 1.14 times less risky than Camellia Metal. The stock trades about -0.15 of its potential returns per unit of risk. The Camellia Metal Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,535  in Camellia Metal Co on September 24, 2024 and sell it today you would lose (80.00) from holding Camellia Metal Co or give up 5.21% of portfolio value over 90 days.

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

Space Shuttle Hi Tech  vs.  Camellia Metal Co

Space Shuttle Hi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Space Shuttle Hi Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Camellia Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camellia Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Camellia Metal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Space Shuttle and Camellia Metal

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

The idea behind Space Shuttle Hi Tech and Camellia Metal Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..