Correlation Between Astar and Strategy Shares

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

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

Diversification Opportunities for Astar and Strategy Shares

0.03

Correlation Coefficient

Astar  Strategy Shares

Significant diversification

The 3 months correlation between Astar and Strategy is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Strategy Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares and Astar 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 Astar are associated (or correlated) with Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares has no effect on the direction of Astar i.e., Astar and Strategy Shares go up and down completely randomly.

Pair Corralation between Astar and Strategy Shares

Assuming the 90 days trading horizon Astar is expected to under-perform the Strategy Shares. In addition to that, Astar is 5.11 times more volatile than Strategy Shares. It trades about -0.19 of its total potential returns per unit of risk. Strategy Shares is currently generating about -0.05 per unit of volatility. If you would invest  2,466  in Strategy Shares on December 21, 2024 and sell it today you would lose (84.00) from holding Strategy Shares or give up 3.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Astar  vs.  Strategy Shares

Astar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto'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 Astar shareholders.

Strategy Shares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategy Shares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Strategy Shares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Astar and Strategy Shares

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

The idea behind Astar and Strategy Shares 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.