Correlation Between Blue Star and Supermarket Income

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

Diversification Opportunities for Blue Star and Supermarket Income

-0.2

Correlation Coefficient

Blue Star  Supermarket Income

Good diversification

The 3 months correlation between Blue and Supermarket is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Capital and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Blue Star i.e., Blue Star and Supermarket Income go up and down completely randomly.

Pair Corralation between Blue Star and Supermarket Income

Assuming the 90 days trading horizon Blue Star Capital is expected to generate 103.5 times more return on investment than Supermarket Income. However, Blue Star is 103.5 times more volatile than Supermarket Income REIT. It trades about 0.14 of its potential returns per unit of risk. Supermarket Income REIT is currently generating about 0.02 per unit of risk. If you would invest  400.00  in Blue Star Capital on December 4, 2024 and sell it today you would earn a total of  450.00  from holding Blue Star Capital or generate 112.5% 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.  Supermarket Income REIT

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

Supermarket Income REIT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Supermarket Income REIT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Supermarket Income is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Blue Star and Supermarket Income

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

The idea behind Blue Star Capital and Supermarket Income REIT 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.