Correlation Between Stella Jones and Transcontinental

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

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

Diversification Opportunities for Stella Jones and Transcontinental

0.84

Correlation Coefficient

Stella Jones  Transcontinental

Very poor diversification

The 3 months correlation between Stella and Transcontinental is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Stella Jones and Transcontinental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental and Stella Jones 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 Stella Jones are associated (or correlated) with Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental has no effect on the direction of Stella Jones i.e., Stella Jones and Transcontinental go up and down completely randomly.

Pair Corralation between Stella Jones and Transcontinental

Assuming the 90 days horizon Stella Jones is expected to generate 1.4 times more return on investment than Transcontinental. However, Stella Jones is 1.4 times more volatile than Transcontinental. It trades about 0.15 of its potential returns per unit of risk. Transcontinental is currently generating about -0.01 per unit of risk. If you would invest  7,526  in Stella Jones on April 24, 2025 and sell it today you would earn a total of  604.00  from holding Stella Jones or generate 8.03% return on investment over 90 days.

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

Stella Jones  vs.  Transcontinental

Stella Jones

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stella Jones are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Stella Jones displayed solid returns over the last few months and may actually be approaching a breakup point.

Transcontinental

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transcontinental are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Transcontinental may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Stella Jones and Transcontinental

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

The idea behind Stella Jones and Transcontinental 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.