Correlation Between Starbucks and UNISEM

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

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

Diversification Opportunities for Starbucks and UNISEM

-0.26

Correlation Coefficient

Starbucks  UNISEM

Very good diversification

The 3 months correlation between Starbucks and UNISEM is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and UNISEM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNISEM and Starbucks 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 Starbucks are associated (or correlated) with UNISEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNISEM has no effect on the direction of Starbucks i.e., Starbucks and UNISEM go up and down completely randomly.

Pair Corralation between Starbucks and UNISEM

Assuming the 90 days trading horizon Starbucks is expected to generate 0.62 times more return on investment than UNISEM. However, Starbucks is 1.62 times less risky than UNISEM. It trades about 0.03 of its potential returns per unit of risk. UNISEM Co is currently generating about 0.01 per unit of risk. If you would invest  192,936  in Starbucks on October 25, 2024 and sell it today you would earn a total of  4,380  from holding Starbucks or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Starbucks  vs.  UNISEM Co

Starbucks

Risk-Adjusted Performance

2 of 100

Insignificant

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

UNISEM

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNISEM Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UNISEM is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Starbucks and UNISEM

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

The idea behind Starbucks and UNISEM Co 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.