Correlation Between Stepstone and Oceantech Acquisitions

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

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

Diversification Opportunities for Stepstone and Oceantech Acquisitions

0.5

Correlation Coefficient

Stepstone  Oceantech Acquisitions

Very weak diversification

The 3 months correlation between Stepstone and Oceantech is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Oceantech Acquisitions I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceantech Acquisitions 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 Oceantech Acquisitions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceantech Acquisitions has no effect on the direction of Stepstone i.e., Stepstone and Oceantech Acquisitions go up and down completely randomly.

Pair Corralation between Stepstone and Oceantech Acquisitions

Given the investment horizon of 90 days Stepstone Group is expected to generate 3.7 times more return on investment than Oceantech Acquisitions. However, Stepstone is 3.7 times more volatile than Oceantech Acquisitions I. It trades about 0.1 of its potential returns per unit of risk. Oceantech Acquisitions I is currently generating about 0.05 per unit of risk. If you would invest  2,419  in Stepstone Group on September 12, 2024 and sell it today you would earn a total of  3,741  from holding Stepstone Group or generate 154.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	29.29%
Values	Daily Returns

Stepstone Group  vs.  Oceantech Acquisitions I

Stepstone Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 9 (%) 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.

Oceantech Acquisitions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oceantech Acquisitions I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Oceantech Acquisitions is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stepstone and Oceantech Acquisitions

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

The idea behind Stepstone Group and Oceantech Acquisitions I 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.