Correlation Between Stille AB and Real Heart

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

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

Diversification Opportunities for Stille AB and Real Heart

-0.53

Correlation Coefficient

Stille AB  Real Heart

Excellent diversification

The 3 months correlation between Stille and Real is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Stille AB and Real Heart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Heart and Stille AB 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 Stille AB are associated (or correlated) with Real Heart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Heart has no effect on the direction of Stille AB i.e., Stille AB and Real Heart go up and down completely randomly.

Pair Corralation between Stille AB and Real Heart

Assuming the 90 days trading horizon Stille AB is expected to generate 0.67 times more return on investment than Real Heart. However, Stille AB is 1.49 times less risky than Real Heart. It trades about 0.09 of its potential returns per unit of risk. Real Heart is currently generating about 0.02 per unit of risk. If you would invest  21,300  in Stille AB on April 24, 2025 and sell it today you would earn a total of  1,500  from holding Stille AB or generate 7.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Stille AB  vs.  Real Heart

Stille AB

Risk-Adjusted Performance

OK

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

Real Heart

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Real Heart are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Real Heart is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stille AB and Real Heart

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

The idea behind Stille AB and Real Heart 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.