Correlation Between Aramark Holdings and Starguide

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

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

Diversification Opportunities for Aramark Holdings and Starguide

0.09

Correlation Coefficient

Aramark Holdings  Starguide

Significant diversification

The 3 months correlation between Aramark and Starguide is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aramark Holdings and Starguide Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starguide Group and Aramark Holdings 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 Aramark Holdings 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 Aramark Holdings i.e., Aramark Holdings and Starguide go up and down completely randomly.

Pair Corralation between Aramark Holdings and Starguide

Given the investment horizon of 90 days Aramark Holdings is expected to generate 410.86 times less return on investment than Starguide. But when comparing it to its historical volatility, Aramark Holdings is 103.14 times less risky than Starguide. It trades about 0.05 of its potential returns per unit of risk. Starguide Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4.16  in Starguide Group on October 25, 2024 and sell it today you would lose (3.52) from holding Starguide Group or give up 84.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Aramark Holdings  vs.  Starguide Group

Aramark Holdings

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aramark Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, Aramark Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Starguide Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Starguide Group are ranked lower than 13 (%) 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 Aramark Holdings and Starguide

The main advantage of trading using opposite Aramark Holdings and Starguide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aramark Holdings 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 Aramark Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.