Correlation Between Stellar and ATP

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

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

Diversification Opportunities for Stellar and ATP

0.95

Correlation Coefficient

Stellar  ATP

Almost no diversification

The 3 months correlation between Stellar and ATP is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and ATP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATP and Stellar 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 Stellar are associated (or correlated) with ATP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATP has no effect on the direction of Stellar i.e., Stellar and ATP go up and down completely randomly.

Pair Corralation between Stellar and ATP

Assuming the 90 days trading horizon Stellar is expected to generate 1.22 times less return on investment than ATP. But when comparing it to its historical volatility, Stellar is 1.24 times less risky than ATP. It trades about 0.21 of its potential returns per unit of risk. ATP is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.00  in ATP on February 6, 2025 and sell it today you would earn a total of  0.00  from holding ATP or generate 23.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Stellar  vs.  ATP

Stellar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellar 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 primary indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for Stellar shareholders.

ATP

Risk-Adjusted Performance

Very Weak

Over the last 90 days ATP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for ATP shareholders.

Pair Trading with Stellar and ATP

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

The idea behind Stellar and ATP 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.