Correlation Between ANT and Starguide

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

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

Diversification Opportunities for ANT and Starguide

0.04

Correlation Coefficient

ANT  Starguide

Significant diversification

The 3 months correlation between ANT and Starguide is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding ANT and Starguide Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starguide Group and ANT 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 ANT are associated (or correlated) with Starguide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starguide Group has no effect on the direction of ANT i.e., ANT and Starguide go up and down completely randomly.

Pair Corralation between ANT and Starguide

Assuming the 90 days trading horizon ANT is expected to generate 15.45 times less return on investment than Starguide. But when comparing it to its historical volatility, ANT is 7.61 times less risky than Starguide. It trades about 0.08 of its potential returns per unit of risk. Starguide Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4.16  in Starguide Group on December 21, 2024 and sell it today you would lose (3.97) from holding Starguide Group or give up 95.43% of portfolio value over 90 days.

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

ANT  vs.  Starguide Group

ANT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ANT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Starguide Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Starguide Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Starguide reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ANT and Starguide

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

The idea behind ANT and Starguide Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.