Correlation Between Cadiz Depositary and Star Equity

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

By analyzing existing cross correlation between Cadiz Depositary Shares and Star Equity Holdings, you can compare the effects of market volatilities on Cadiz Depositary and Star Equity 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 Cadiz Depositary with a short position of Star Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz Depositary and Star Equity.

Diversification Opportunities for Cadiz Depositary and Star Equity

-0.23

Correlation Coefficient

Cadiz Depositary  Star Equity

Very good diversification

The 3 months correlation between Cadiz and Star is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Depositary Shares and Star Equity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Equity Holdings and Cadiz Depositary 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 Cadiz Depositary Shares are associated (or correlated) with Star Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Equity Holdings has no effect on the direction of Cadiz Depositary i.e., Cadiz Depositary and Star Equity go up and down completely randomly.

Pair Corralation between Cadiz Depositary and Star Equity

Assuming the 90 days horizon Cadiz Depositary Shares is expected to generate 0.54 times more return on investment than Star Equity. However, Cadiz Depositary Shares is 1.85 times less risky than Star Equity. It trades about 0.3 of its potential returns per unit of risk. Star Equity Holdings is currently generating about 0.04 per unit of risk. If you would invest  1,649  in Cadiz Depositary Shares on October 7, 2024 and sell it today you would earn a total of  101.00  from holding Cadiz Depositary Shares or generate 6.12% return on investment over 90 days.

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

Cadiz Depositary Shares  vs.  Star Equity Holdings

Cadiz Depositary Shares

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cadiz Depositary Shares are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Cadiz Depositary reported solid returns over the last few months and may actually be approaching a breakup point.

Star Equity Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Equity Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Star Equity is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cadiz Depositary and Star Equity

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

The idea behind Cadiz Depositary Shares and Star Equity Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..