Correlation Between Celestia and REQ

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

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

Diversification Opportunities for Celestia and REQ

-0.18

Correlation Coefficient

Celestia  REQ

Good diversification

The 3 months correlation between Celestia and REQ is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Celestia and REQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REQ and Celestia 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 Celestia are associated (or correlated) with REQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REQ has no effect on the direction of Celestia i.e., Celestia and REQ go up and down completely randomly.

Pair Corralation between Celestia and REQ

Assuming the 90 days trading horizon Celestia is expected to generate 0.92 times more return on investment than REQ. However, Celestia is 1.09 times less risky than REQ. It trades about 0.06 of its potential returns per unit of risk. REQ is currently generating about -0.06 per unit of risk. If you would invest  883.00  in Celestia on February 11, 2024 and sell it today you would earn a total of  35.00  from holding Celestia or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Celestia  vs.  REQ

Celestia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celestia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for Celestia shareholders.

REQ

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REQ are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, REQ exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celestia and REQ

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

The idea behind Celestia and REQ 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.