Correlation Between Borealis Exploration and Starguide

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

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

Diversification Opportunities for Borealis Exploration and Starguide

0.37

Correlation Coefficient

Borealis Exploration  Starguide

Weak diversification

The 3 months correlation between Borealis and Starguide is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Borealis Exploration and Starguide Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starguide Group and Borealis Exploration 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 Borealis Exploration are associated (or correlated) with Starguide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starguide Group has no effect on the direction of Borealis Exploration i.e., Borealis Exploration and Starguide go up and down completely randomly.

Pair Corralation between Borealis Exploration and Starguide

Assuming the 90 days horizon Borealis Exploration is expected to generate 67.6 times less return on investment than Starguide. But when comparing it to its historical volatility, Borealis Exploration is 24.5 times less risky than Starguide. It trades about 0.07 of its potential returns per unit of risk. Starguide Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4.16  in Starguide Group on October 24, 2024 and sell it today you would lose (3.52) from holding Starguide Group or give up 84.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Borealis Exploration  vs.  Starguide Group

Borealis Exploration

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Borealis Exploration are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Borealis Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Starguide Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Starguide Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Starguide reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Borealis Exploration and Starguide

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

The idea behind Borealis Exploration and Starguide Group 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.