Correlation Between Hansa Investment and Blue Star

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

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

Diversification Opportunities for Hansa Investment and Blue Star

0.35

Correlation Coefficient

Hansa Investment  Blue Star

Weak diversification

The 3 months correlation between Hansa and Blue is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Investment and Blue Star Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Star Capital and Hansa Investment 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 Hansa Investment are associated (or correlated) with Blue Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Star Capital has no effect on the direction of Hansa Investment i.e., Hansa Investment and Blue Star go up and down completely randomly.

Pair Corralation between Hansa Investment and Blue Star

Assuming the 90 days trading horizon Hansa Investment is expected to generate 0.18 times more return on investment than Blue Star. However, Hansa Investment is 5.6 times less risky than Blue Star. It trades about 0.03 of its potential returns per unit of risk. Blue Star Capital is currently generating about -0.01 per unit of risk. If you would invest  22,600  in Hansa Investment on October 5, 2024 and sell it today you would earn a total of  200.00  from holding Hansa Investment or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hansa Investment  vs.  Blue Star Capital

Hansa Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hansa Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hansa Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Blue Star Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Blue Star exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hansa Investment and Blue Star

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

The idea behind Hansa Investment and Blue Star Capital 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 Anywhere module to track or share privately all of your investments from the convenience of any device.