Correlation Between Color Star and Cardlytics

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

Diversification Opportunities for Color Star and Cardlytics

0.78

Correlation Coefficient

Color Star  Cardlytics

Poor diversification

The 3 months correlation between Color and Cardlytics is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Color Star Technology and Cardlytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardlytics 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 Cardlytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardlytics has no effect on the direction of Color Star i.e., Color Star and Cardlytics go up and down completely randomly.

Pair Corralation between Color Star and Cardlytics

Considering the 90-day investment horizon Color Star Technology is expected to under-perform the Cardlytics. But the stock apears to be less risky and, when comparing its historical volatility, Color Star Technology is 1.11 times less risky than Cardlytics. The stock trades about -0.24 of its potential returns per unit of risk. The Cardlytics is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  383.00  in Cardlytics on December 29, 2024 and sell it today you would lose (182.00) from holding Cardlytics or give up 47.52% of portfolio value over 90 days.

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

Color Star Technology  vs.  Cardlytics

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cardlytics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cardlytics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Color Star and Cardlytics

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

The idea behind Color Star Technology and Cardlytics 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.