Correlation Between Applied DNA and Star Equity

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Can any of the company-specific risk be diversified away by investing in both Applied DNA and Star Equity 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 Applied DNA and Star Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied DNA Sciences and Star Equity Holdings, you can compare the effects of market volatilities on Applied DNA and Star Equity 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 Applied DNA with a short position of Star Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied DNA and Star Equity.

Diversification Opportunities for Applied DNA and Star Equity

AppliedStarDiversified AwayAppliedStarDiversified Away100%
0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Applied and Star is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Applied DNA Sciences and Star Equity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Equity Holdings and Applied DNA 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 Applied DNA Sciences are associated (or correlated) with Star Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Equity Holdings has no effect on the direction of Applied DNA i.e., Applied DNA and Star Equity go up and down completely randomly.

Pair Corralation between Applied DNA and Star Equity

Given the investment horizon of 90 days Applied DNA Sciences is expected to under-perform the Star Equity. In addition to that, Applied DNA is 3.46 times more volatile than Star Equity Holdings. It trades about -0.17 of its total potential returns per unit of risk. Star Equity Holdings is currently generating about -0.19 per unit of volatility. If you would invest  411.00  in Star Equity Holdings on September 15, 2024 and sell it today you would lose (148.00) from holding Star Equity Holdings or give up 36.01% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Applied DNA Sciences  vs.  Star Equity Holdings

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -100-80-60-40-20020
JavaScript chart by amCharts 3.21.15APDN STRR
       Timeline  
Applied DNA Sciences 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Applied DNA Sciences 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 very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.20.40.60.811.21.4
Star Equity Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Star Equity Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec33.544.5

Applied DNA and Star Equity Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-19.81-14.84-9.86-4.89-0.08294.068.1812.3116.43 0.0050.0100.0150.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15APDN STRR
       Returns  

Pair Trading with Applied DNA and Star Equity

The main advantage of trading using opposite Applied DNA and Star Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied DNA position performs unexpectedly, Star Equity 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 Star Equity will offset losses from the drop in Star Equity's long position.
The idea behind Applied DNA Sciences and Star Equity 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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