Correlation Between Carefree and Starguide

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

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

Diversification Opportunities for Carefree and Starguide

0.0

Correlation Coefficient

Carefree  Starguide

Pay attention - limited upside

The 3 months correlation between Carefree and Starguide is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Carefree Group and Starguide Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starguide Group and Carefree 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 Carefree Group 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 Carefree i.e., Carefree and Starguide go up and down completely randomly.

Pair Corralation between Carefree and Starguide

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	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Carefree Group  vs.  Starguide Group

Carefree Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carefree Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Carefree is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 Carefree and Starguide

The main advantage of trading using opposite Carefree and Starguide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carefree 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 Carefree Group 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.