Correlation Between Blue Star and Standard Chartered

Can any of the company-specific risk be diversified away by investing in both Blue Star and Standard Chartered 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 Standard Chartered 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 Standard Chartered PLC, you can compare the effects of market volatilities on Blue Star and Standard Chartered 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 Standard Chartered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and Standard Chartered.

Diversification Opportunities for Blue Star and Standard Chartered

-0.07

Correlation Coefficient

Blue Star  Standard Chartered

Good diversification

The 3 months correlation between Blue and Standard is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Capital and Standard Chartered PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Chartered PLC 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 Standard Chartered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Chartered PLC has no effect on the direction of Blue Star i.e., Blue Star and Standard Chartered go up and down completely randomly.

Pair Corralation between Blue Star and Standard Chartered

Assuming the 90 days trading horizon Blue Star Capital is expected to generate 103.56 times more return on investment than Standard Chartered. However, Blue Star is 103.56 times more volatile than Standard Chartered PLC. It trades about 0.14 of its potential returns per unit of risk. Standard Chartered PLC is currently generating about 0.35 per unit of risk. If you would invest  350.00  in Blue Star Capital on December 3, 2024 and sell it today you would earn a total of  500.00  from holding Blue Star Capital or generate 142.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Blue Star Capital  vs.  Standard Chartered PLC

Blue Star Capital

Risk-Adjusted Performance

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 uncertain technical and fundamental indicators, Blue Star exhibited solid returns over the last few months and may actually be approaching a breakup point.

Standard Chartered PLC

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Chartered PLC are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Standard Chartered unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Star and Standard Chartered

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

The idea behind Blue Star Capital and Standard Chartered PLC 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.