Correlation Between STEPN and TLOS

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

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

Diversification Opportunities for STEPN and TLOS

-0.45

Correlation Coefficient

STEPN  TLOS

Very good diversification

The 3 months correlation between STEPN and TLOS is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding STEPN and TLOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TLOS and STEPN 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 STEPN are associated (or correlated) with TLOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TLOS has no effect on the direction of STEPN i.e., STEPN and TLOS go up and down completely randomly.

Pair Corralation between STEPN and TLOS

Assuming the 90 days trading horizon STEPN is expected to generate 1.47 times more return on investment than TLOS. However, STEPN is 1.47 times more volatile than TLOS. It trades about 0.15 of its potential returns per unit of risk. TLOS is currently generating about -0.02 per unit of risk. If you would invest  13.00  in STEPN on September 3, 2024 and sell it today you would earn a total of  10.00  from holding STEPN or generate 76.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

STEPN  vs.  TLOS

STEPN

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STEPN are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, STEPN exhibited solid returns over the last few months and may actually be approaching a breakup point.

TLOS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TLOS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, TLOS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with STEPN and TLOS

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

The idea behind STEPN and TLOS 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 Transaction History module to view history of all your transactions and understand their impact on performance.