Correlation Between Micro Star and Stark Technology

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

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

Diversification Opportunities for Micro Star and Stark Technology

0.27

Correlation Coefficient

Micro Star  Stark Technology

Modest diversification

The 3 months correlation between Micro and Stark is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Micro Star International Co and Stark Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stark Technology and Micro Star 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 Micro Star International Co are associated (or correlated) with Stark Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stark Technology has no effect on the direction of Micro Star i.e., Micro Star and Stark Technology go up and down completely randomly.

Pair Corralation between Micro Star and Stark Technology

Assuming the 90 days trading horizon Micro Star International Co is expected to under-perform the Stark Technology. But the stock apears to be less risky and, when comparing its historical volatility, Micro Star International Co is 1.14 times less risky than Stark Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Stark Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  12,850  in Stark Technology on October 6, 2024 and sell it today you would earn a total of  900.00  from holding Stark Technology or generate 7.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.73%
Values	Daily Returns

Micro Star International Co  vs.  Stark Technology

Micro Star Internati

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Micro Star International Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Micro Star may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Stark Technology

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Stark Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Stark Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Micro Star and Stark Technology

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

The idea behind Micro Star International Co and Stark Technology 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.