Correlation Between Eterna Therapeutics and Star Equity

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

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

Diversification Opportunities for Eterna Therapeutics and Star Equity

-0.15

Correlation Coefficient

Eterna Therapeutics  Star Equity

Good diversification

The 3 months correlation between Eterna and Star is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eterna Therapeutics 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 Eterna Therapeutics 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 Eterna Therapeutics 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 Eterna Therapeutics i.e., Eterna Therapeutics and Star Equity go up and down completely randomly.

Pair Corralation between Eterna Therapeutics and Star Equity

Given the investment horizon of 90 days Eterna Therapeutics is expected to generate 3.06 times more return on investment than Star Equity. However, Eterna Therapeutics is 3.06 times more volatile than Star Equity Holdings. It trades about 0.04 of its potential returns per unit of risk. Star Equity Holdings is currently generating about 0.11 per unit of risk. If you would invest  28.00  in Eterna Therapeutics on December 25, 2024 and sell it today you would lose (2.00) from holding Eterna Therapeutics or give up 7.14% of portfolio value over 90 days.

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

Eterna Therapeutics  vs.  Star Equity Holdings

Eterna Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eterna Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Eterna Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Star Equity Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Star Equity Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Star Equity reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eterna Therapeutics and Star Equity

The main advantage of trading using opposite Eterna Therapeutics and Star Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eterna Therapeutics 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 Eterna Therapeutics 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.