Correlation Between Color Star and Cable One

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

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

Diversification Opportunities for Color Star and Cable One

0.83

Correlation Coefficient

Color Star  Cable One

Very poor diversification

The 3 months correlation between Color and Cable is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Color Star Technology and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One and Color 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 Color Star Technology are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Color Star i.e., Color Star and Cable One go up and down completely randomly.

Pair Corralation between Color Star and Cable One

Considering the 90-day investment horizon Color Star Technology is expected to under-perform the Cable One. In addition to that, Color Star is 3.33 times more volatile than Cable One. It trades about -0.22 of its total potential returns per unit of risk. Cable One is currently generating about -0.3 per unit of volatility. If you would invest  41,312  in Cable One on November 28, 2024 and sell it today you would lose (14,324) from holding Cable One or give up 34.67% of portfolio value over 90 days.

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

Color Star Technology  vs.  Cable One

Color Star Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Color Star Technology 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 Stock's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cable One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cable One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Color Star and Cable One

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

The idea behind Color Star Technology and Cable One 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 Stocks Directory module to find actively traded stocks across global markets.