Correlation Between Stark Technology and Micro Star

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

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

Diversification Opportunities for Stark Technology and Micro Star

0.56

Correlation Coefficient

Stark Technology  Micro Star

Very weak diversification

The 3 months correlation between Stark and Micro is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Stark Technology and Micro Star International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Star Internati and Stark Technology 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 Stark Technology are associated (or correlated) with Micro Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Star Internati has no effect on the direction of Stark Technology i.e., Stark Technology and Micro Star go up and down completely randomly.

Pair Corralation between Stark Technology and Micro Star

Assuming the 90 days trading horizon Stark Technology is expected to generate 0.75 times more return on investment than Micro Star. However, Stark Technology is 1.33 times less risky than Micro Star. It trades about 0.04 of its potential returns per unit of risk. Micro Star International Co is currently generating about -0.05 per unit of risk. If you would invest  13,650  in Stark Technology on December 29, 2024 and sell it today you would earn a total of  500.00  from holding Stark Technology or generate 3.66% return on investment over 90 days.

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

Stark Technology  vs.  Micro Star International Co

Stark Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stark Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Stark Technology is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Micro Star Internati

Risk-Adjusted Performance

Very Weak

Over the last 90 days Micro Star International Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Stark Technology and Micro Star

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

The idea behind Stark Technology and Micro Star International Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.