Correlation Between BellRock Brands and Stemsation International

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

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

Diversification Opportunities for BellRock Brands and Stemsation International

0.0

Correlation Coefficient

BellRock Brands  Stemsation International

Pay attention - limited upside

The 3 months correlation between BellRock and Stemsation is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BellRock Brands and Stemsation International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stemsation International and BellRock Brands 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 BellRock Brands are associated (or correlated) with Stemsation International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stemsation International has no effect on the direction of BellRock Brands i.e., BellRock Brands and Stemsation International go up and down completely randomly.

Pair Corralation between BellRock Brands and Stemsation International

Assuming the 90 days horizon BellRock Brands is expected to generate 5.24 times more return on investment than Stemsation International. However, BellRock Brands is 5.24 times more volatile than Stemsation International. It trades about 0.09 of its potential returns per unit of risk. Stemsation International is currently generating about 0.09 per unit of risk. If you would invest  0.01  in BellRock Brands on September 14, 2024 and sell it today you would lose (0.01) from holding BellRock Brands or give up 100.0% of portfolio value over 90 days.

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

BellRock Brands  vs.  Stemsation International

BellRock Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BellRock Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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.

Stemsation International

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stemsation International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Stemsation International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BellRock Brands and Stemsation International

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

The idea behind BellRock Brands and Stemsation International 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.