Correlation Between Blue Star and AmmPower Corp

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

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

Diversification Opportunities for Blue Star and AmmPower Corp

-0.56

Correlation Coefficient

Blue Star  AmmPower Corp

Excellent diversification

The 3 months correlation between Blue and AmmPower is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Gold and AmmPower Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmmPower Corp and Blue 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 Blue Star Gold are associated (or correlated) with AmmPower Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmmPower Corp has no effect on the direction of Blue Star i.e., Blue Star and AmmPower Corp go up and down completely randomly.

Pair Corralation between Blue Star and AmmPower Corp

Assuming the 90 days horizon Blue Star Gold is expected to generate 0.69 times more return on investment than AmmPower Corp. However, Blue Star Gold is 1.45 times less risky than AmmPower Corp. It trades about 0.21 of its potential returns per unit of risk. AmmPower Corp is currently generating about 0.0 per unit of risk. If you would invest  3.25  in Blue Star Gold on December 29, 2024 and sell it today you would earn a total of  5.00  from holding Blue Star Gold or generate 153.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Blue Star Gold  vs.  AmmPower Corp

Blue Star Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Gold are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Blue Star reported solid returns over the last few months and may actually be approaching a breakup point.

AmmPower Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days AmmPower Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AmmPower Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Blue Star and AmmPower Corp

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

The idea behind Blue Star Gold and AmmPower Corp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.