Correlation Between Mindax and Star Combo

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

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

Diversification Opportunities for Mindax and Star Combo

-0.28

Correlation Coefficient

Mindax  Star Combo

Very good diversification

The 3 months correlation between Mindax and Star is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mindax Limited and Star Combo Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Combo Pharma and Mindax 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 Mindax Limited are associated (or correlated) with Star Combo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Combo Pharma has no effect on the direction of Mindax i.e., Mindax and Star Combo go up and down completely randomly.

Pair Corralation between Mindax and Star Combo

Assuming the 90 days trading horizon Mindax is expected to generate 1.03 times less return on investment than Star Combo. In addition to that, Mindax is 1.15 times more volatile than Star Combo Pharma. It trades about 0.01 of its total potential returns per unit of risk. Star Combo Pharma is currently generating about 0.02 per unit of volatility. If you would invest  17.00  in Star Combo Pharma on October 26, 2024 and sell it today you would lose (3.00) from holding Star Combo Pharma or give up 17.65% of portfolio value over 90 days.

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

Mindax Limited  vs.  Star Combo Pharma

Mindax Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mindax Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mindax unveiled solid returns over the last few months and may actually be approaching a breakup point.

Star Combo Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Combo Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Star Combo is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mindax and Star Combo

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

The idea behind Mindax Limited and Star Combo Pharma 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.