Correlation Between Stargate Finance and AE

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

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

Diversification Opportunities for Stargate Finance and AE

0.69

Correlation Coefficient

Stargate Finance  AE

Poor diversification

The 3 months correlation between Stargate and AE is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Stargate Finance and AE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AE and Stargate Finance 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 Stargate Finance are associated (or correlated) with AE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AE has no effect on the direction of Stargate Finance i.e., Stargate Finance and AE go up and down completely randomly.

Pair Corralation between Stargate Finance and AE

Assuming the 90 days trading horizon Stargate Finance is expected to generate 0.86 times more return on investment than AE. However, Stargate Finance is 1.16 times less risky than AE. It trades about 0.12 of its potential returns per unit of risk. AE is currently generating about 0.09 per unit of risk. If you would invest  28.00  in Stargate Finance on September 3, 2024 and sell it today you would earn a total of  12.00  from holding Stargate Finance or generate 42.86% return on investment over 90 days.

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

Stargate Finance  vs.  AE

Stargate Finance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stargate Finance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Stargate Finance exhibited solid returns over the last few months and may actually be approaching a breakup point.

AE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, AE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stargate Finance and AE

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

The idea behind Stargate Finance and AE 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.