Correlation Between Star Media and DC HEALTHCARE

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

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

Diversification Opportunities for Star Media and DC HEALTHCARE

0.17

Correlation Coefficient

Star Media  DC HEALTHCARE

Average diversification

The 3 months correlation between Star and 0283 is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Star Media Group and DC HEALTHCARE HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC HEALTHCARE HOLDINGS and Star Media 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 Star Media Group are associated (or correlated) with DC HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC HEALTHCARE HOLDINGS has no effect on the direction of Star Media i.e., Star Media and DC HEALTHCARE go up and down completely randomly.

Pair Corralation between Star Media and DC HEALTHCARE

Assuming the 90 days trading horizon Star Media Group is expected to under-perform the DC HEALTHCARE. But the stock apears to be less risky and, when comparing its historical volatility, Star Media Group is 1.61 times less risky than DC HEALTHCARE. The stock trades about -0.08 of its potential returns per unit of risk. The DC HEALTHCARE HOLDINGS is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  17.00  in DC HEALTHCARE HOLDINGS on September 3, 2024 and sell it today you would lose (1.00) from holding DC HEALTHCARE HOLDINGS or give up 5.88% of portfolio value over 90 days.

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

Star Media Group  vs.  DC HEALTHCARE HOLDINGS

Star Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

DC HEALTHCARE HOLDINGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DC HEALTHCARE HOLDINGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, DC HEALTHCARE is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Star Media and DC HEALTHCARE

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

The idea behind Star Media Group and DC HEALTHCARE HOLDINGS 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.