Correlation Between Inotiv and Star Equity

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

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

Diversification Opportunities for Inotiv and Star Equity

0.01

Correlation Coefficient

Inotiv  Star Equity

Significant diversification

The 3 months correlation between Inotiv and Star is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Inotiv Inc and Star Equity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Equity Holdings and Inotiv 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 Inotiv Inc are associated (or correlated) with Star Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Equity Holdings has no effect on the direction of Inotiv i.e., Inotiv and Star Equity go up and down completely randomly.

Pair Corralation between Inotiv and Star Equity

Given the investment horizon of 90 days Inotiv Inc is expected to generate 4.38 times more return on investment than Star Equity. However, Inotiv is 4.38 times more volatile than Star Equity Holdings. It trades about 0.05 of its potential returns per unit of risk. Star Equity Holdings is currently generating about 0.04 per unit of risk. If you would invest  366.00  in Inotiv Inc on November 29, 2024 and sell it today you would earn a total of  16.00  from holding Inotiv Inc or generate 4.37% return on investment over 90 days.

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

Inotiv Inc  vs.  Star Equity Holdings

Inotiv Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inotiv Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Inotiv showed solid returns over the last few months and may actually be approaching a breakup point.

Star Equity Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Star Equity Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Star Equity is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Inotiv and Star Equity

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

The idea behind Inotiv Inc and Star Equity Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.