Correlation Between Stepstone and 694308HH3

Can any of the company-specific risk be diversified away by investing in both Stepstone and 694308HH3 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 694308HH3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stepstone Group and US694308HH37, you can compare the effects of market volatilities on Stepstone and 694308HH3 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 694308HH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and 694308HH3.

Diversification Opportunities for Stepstone and 694308HH3

-0.2

Correlation Coefficient

Stepstone  694308HH3

Good diversification

The 3 months correlation between Stepstone and 694308HH3 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and US694308HH37 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US694308HH37 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 694308HH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US694308HH37 has no effect on the direction of Stepstone i.e., Stepstone and 694308HH3 go up and down completely randomly.

Pair Corralation between Stepstone and 694308HH3

Given the investment horizon of 90 days Stepstone Group is expected to generate 2.12 times more return on investment than 694308HH3. However, Stepstone is 2.12 times more volatile than US694308HH37. It trades about 0.02 of its potential returns per unit of risk. US694308HH37 is currently generating about -0.09 per unit of risk. If you would invest  5,771  in Stepstone Group on September 24, 2024 and sell it today you would earn a total of  41.00  from holding Stepstone Group or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.88%
Values	Daily Returns

Stepstone Group  vs.  US694308HH37

Stepstone Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Stepstone is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

US694308HH37

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US694308HH37 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 694308HH3 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stepstone and 694308HH3

The main advantage of trading using opposite Stepstone and 694308HH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, 694308HH3 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 694308HH3 will offset losses from the drop in 694308HH3's long position.

The idea behind Stepstone Group and US694308HH37 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 Managers module to screen money managers from public funds and ETFs managed around the world.