Correlation Between Libstar Holdings and Coreshares Index

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

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

Diversification Opportunities for Libstar Holdings and Coreshares Index

-0.5

Correlation Coefficient

Libstar Holdings  Coreshares Index

Very good diversification

The 3 months correlation between Libstar and Coreshares is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Libstar Holdings and Coreshares Index Tracker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coreshares Index Tracker and Libstar Holdings 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 Libstar Holdings are associated (or correlated) with Coreshares Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coreshares Index Tracker has no effect on the direction of Libstar Holdings i.e., Libstar Holdings and Coreshares Index go up and down completely randomly.

Pair Corralation between Libstar Holdings and Coreshares Index

Assuming the 90 days trading horizon Libstar Holdings is expected to under-perform the Coreshares Index. In addition to that, Libstar Holdings is 3.95 times more volatile than Coreshares Index Tracker. It trades about -0.03 of its total potential returns per unit of risk. Coreshares Index Tracker is currently generating about 0.03 per unit of volatility. If you would invest  109,770  in Coreshares Index Tracker on December 2, 2024 and sell it today you would earn a total of  1,630  from holding Coreshares Index Tracker or generate 1.48% return on investment over 90 days.

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

Libstar Holdings  vs.  Coreshares Index Tracker

Libstar Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Libstar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Coreshares Index Tracker

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coreshares Index Tracker are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Coreshares Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Libstar Holdings and Coreshares Index

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

The idea behind Libstar Holdings and Coreshares Index Tracker 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.