Correlation Between Boston Properties and Stardust Power

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

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

Diversification Opportunities for Boston Properties and Stardust Power

-0.06

Correlation Coefficient

Boston Properties  Stardust Power

Good diversification

The 3 months correlation between Boston and Stardust is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Stardust Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stardust Power and Boston Properties 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 Boston Properties are associated (or correlated) with Stardust Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stardust Power has no effect on the direction of Boston Properties i.e., Boston Properties and Stardust Power go up and down completely randomly.

Pair Corralation between Boston Properties and Stardust Power

Considering the 90-day investment horizon Boston Properties is expected to generate 0.1 times more return on investment than Stardust Power. However, Boston Properties is 9.68 times less risky than Stardust Power. It trades about 0.1 of its potential returns per unit of risk. Stardust Power is currently generating about 0.0 per unit of risk. If you would invest  7,375  in Boston Properties on September 5, 2024 and sell it today you would earn a total of  640.00  from holding Boston Properties or generate 8.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.95%
Values	Daily Returns

Boston Properties  vs.  Stardust Power

Boston Properties

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Properties are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Boston Properties may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Stardust Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stardust Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Stardust Power is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Boston Properties and Stardust Power

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

The idea behind Boston Properties and Stardust Power 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.