Correlation Between Star Media and PIE Industrial

Can any of the company-specific risk be diversified away by investing in both Star Media and PIE Industrial 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 PIE Industrial 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 PIE Industrial Bhd, you can compare the effects of market volatilities on Star Media and PIE Industrial 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 PIE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Media and PIE Industrial.

Diversification Opportunities for Star Media and PIE Industrial

0.05

Correlation Coefficient

Star Media  PIE Industrial

Significant diversification

The 3 months correlation between Star and PIE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Star Media Group and PIE Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIE Industrial Bhd 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 PIE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIE Industrial Bhd has no effect on the direction of Star Media i.e., Star Media and PIE Industrial go up and down completely randomly.

Pair Corralation between Star Media and PIE Industrial

Assuming the 90 days trading horizon Star Media Group is expected to generate 0.54 times more return on investment than PIE Industrial. However, Star Media Group is 1.85 times less risky than PIE Industrial. It trades about 0.07 of its potential returns per unit of risk. PIE Industrial Bhd is currently generating about -0.18 per unit of risk. If you would invest  40.00  in Star Media Group on December 30, 2024 and sell it today you would earn a total of  3.00  from holding Star Media Group or generate 7.5% return on investment over 90 days.

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

Star Media Group  vs.  PIE Industrial Bhd

Star Media Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Star Media Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Star Media may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PIE Industrial Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days PIE Industrial Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Star Media and PIE Industrial

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

The idea behind Star Media Group and PIE Industrial Bhd 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.