Correlation Between Blue Star and Electronic Arts

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

By analyzing existing cross correlation between Blue Star Capital and Electronic Arts, you can compare the effects of market volatilities on Blue Star and Electronic Arts 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 Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and Electronic Arts.

Diversification Opportunities for Blue Star and Electronic Arts

-0.12

Correlation Coefficient

Blue Star  Electronic Arts

Good diversification

The 3 months correlation between Blue and Electronic is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Capital and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts 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 Capital are associated (or correlated) with Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of Blue Star i.e., Blue Star and Electronic Arts go up and down completely randomly.

Pair Corralation between Blue Star and Electronic Arts

Assuming the 90 days trading horizon Blue Star Capital is expected to generate 34.19 times more return on investment than Electronic Arts. However, Blue Star is 34.19 times more volatile than Electronic Arts. It trades about 0.04 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.01 per unit of risk. If you would invest  3,900  in Blue Star Capital on October 25, 2024 and sell it today you would lose (2,850) from holding Blue Star Capital or give up 73.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Blue Star Capital  vs.  Electronic Arts

Blue Star Capital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Capital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Blue Star exhibited solid returns over the last few months and may actually be approaching a breakup point.

Electronic Arts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electronic Arts 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Blue Star and Electronic Arts

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

The idea behind Blue Star Capital and Electronic Arts 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.