Correlation Between Stepstone and AstroNova

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

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

Diversification Opportunities for Stepstone and AstroNova

-0.07

Correlation Coefficient

Stepstone  AstroNova

Good diversification

The 3 months correlation between Stepstone and AstroNova is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and AstroNova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstroNova and Stepstone 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 Stepstone Group are associated (or correlated) with AstroNova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstroNova has no effect on the direction of Stepstone i.e., Stepstone and AstroNova go up and down completely randomly.

Pair Corralation between Stepstone and AstroNova

Given the investment horizon of 90 days Stepstone Group is expected to generate 0.86 times more return on investment than AstroNova. However, Stepstone Group is 1.16 times less risky than AstroNova. It trades about 0.16 of its potential returns per unit of risk. AstroNova is currently generating about 0.02 per unit of risk. If you would invest  5,379  in Stepstone Group on August 31, 2024 and sell it today you would earn a total of  1,225  from holding Stepstone Group or generate 22.77% return on investment over 90 days.

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

Stepstone Group  vs.  AstroNova

Stepstone Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, Stepstone reported solid returns over the last few months and may actually be approaching a breakup point.

AstroNova

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AstroNova are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AstroNova is not utilizing all of its potentials. The new stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stepstone and AstroNova

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

The idea behind Stepstone Group and AstroNova 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.