Correlation Between ProStar Holdings and IPE Universal

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

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

Diversification Opportunities for ProStar Holdings and IPE Universal

0.36

Correlation Coefficient

ProStar Holdings  IPE Universal

Weak diversification

The 3 months correlation between ProStar and IPE is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ProStar Holdings and IPE Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPE Universal and ProStar 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 ProStar Holdings are associated (or correlated) with IPE Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPE Universal has no effect on the direction of ProStar Holdings i.e., ProStar Holdings and IPE Universal go up and down completely randomly.

Pair Corralation between ProStar Holdings and IPE Universal

Assuming the 90 days horizon ProStar Holdings is expected to generate 1.65 times less return on investment than IPE Universal. In addition to that, ProStar Holdings is 1.13 times more volatile than IPE Universal. It trades about 0.06 of its total potential returns per unit of risk. IPE Universal is currently generating about 0.11 per unit of volatility. If you would invest  395.00  in IPE Universal on December 28, 2024 and sell it today you would earn a total of  205.00  from holding IPE Universal or generate 51.9% return on investment over 90 days.

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

ProStar Holdings  vs.  IPE Universal

ProStar Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProStar Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ProStar Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

IPE Universal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IPE Universal are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, IPE Universal unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProStar Holdings and IPE Universal

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

The idea behind ProStar Holdings and IPE Universal 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .