Correlation Between Gold Reserve and Star Alliance

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

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

Diversification Opportunities for Gold Reserve and Star Alliance

0.61

Correlation Coefficient

Gold Reserve  Star Alliance

Poor diversification

The 3 months correlation between Gold and Star is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gold Reserve and Star Alliance International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Alliance Intern and Gold Reserve 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 Gold Reserve are associated (or correlated) with Star Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Alliance Intern has no effect on the direction of Gold Reserve i.e., Gold Reserve and Star Alliance go up and down completely randomly.

Pair Corralation between Gold Reserve and Star Alliance

Assuming the 90 days horizon Gold Reserve is expected to under-perform the Star Alliance. But the otc stock apears to be less risky and, when comparing its historical volatility, Gold Reserve is 1.87 times less risky than Star Alliance. The otc stock trades about -0.12 of its potential returns per unit of risk. The Star Alliance International is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  0.11  in Star Alliance International on October 17, 2024 and sell it today you would lose (0.06) from holding Star Alliance International or give up 54.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Gold Reserve  vs.  Star Alliance International

Gold Reserve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Reserve has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Star Alliance Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Alliance International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Gold Reserve and Star Alliance

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

The idea behind Gold Reserve and Star Alliance International 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.