Correlation Between Blackstar Enterprise and Magic Empire

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

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

Diversification Opportunities for Blackstar Enterprise and Magic Empire

0.34

Correlation Coefficient

Blackstar Enterprise  Magic Empire

Weak diversification

The 3 months correlation between Blackstar and Magic is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Blackstar Enterprise Group and Magic Empire Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Empire Global and Blackstar Enterprise 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 Blackstar Enterprise Group are associated (or correlated) with Magic Empire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Empire Global has no effect on the direction of Blackstar Enterprise i.e., Blackstar Enterprise and Magic Empire go up and down completely randomly.

Pair Corralation between Blackstar Enterprise and Magic Empire

Given the investment horizon of 90 days Blackstar Enterprise Group is expected to generate 1.48 times more return on investment than Magic Empire. However, Blackstar Enterprise is 1.48 times more volatile than Magic Empire Global. It trades about 0.09 of its potential returns per unit of risk. Magic Empire Global is currently generating about -0.04 per unit of risk. If you would invest  0.05  in Blackstar Enterprise Group on December 29, 2024 and sell it today you would earn a total of  0.01  from holding Blackstar Enterprise Group or generate 20.0% return on investment over 90 days.

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

Blackstar Enterprise Group  vs.  Magic Empire Global

Blackstar Enterprise

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstar Enterprise Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Blackstar Enterprise demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Magic Empire Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magic Empire Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Blackstar Enterprise and Magic Empire

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

The idea behind Blackstar Enterprise Group and Magic Empire Global 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.