Correlation Between AYR Strategies and Stem Holdings

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

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

Diversification Opportunities for AYR Strategies and Stem Holdings

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Correlation Coefficient

AYR Strategies  Stem Holdings

Pay attention - limited upside

The 3 months correlation between AYR and Stem is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AYR Strategies Class and Stem Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Holdings and AYR Strategies 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 AYR Strategies Class 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 AYR Strategies i.e., AYR Strategies and Stem Holdings go up and down completely randomly.

Pair Corralation between AYR Strategies and Stem Holdings

Assuming the 90 days horizon AYR Strategies Class is expected to under-perform the Stem Holdings. But the otc stock apears to be less risky and, when comparing its historical volatility, AYR Strategies Class is 9.39 times less risky than Stem Holdings. The otc stock trades about -0.03 of its potential returns per unit of risk. The Stem Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Stem Holdings on September 19, 2024 and sell it today you would earn a total of  0.70  from holding Stem Holdings or generate 233.33% return on investment over 90 days.

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

AYR Strategies Class  vs.  Stem Holdings

AYR Strategies Class

Risk-Adjusted Performance

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Very Weak

Over the last 90 days AYR Strategies Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Stem Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stem Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Stem Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AYR Strategies and Stem Holdings

The main advantage of trading using opposite AYR Strategies and Stem Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AYR Strategies 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 AYR Strategies Class 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.