Correlation Between Starfleet Innotech and Business Development

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

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

Diversification Opportunities for Starfleet Innotech and Business Development

-0.08

Correlation Coefficient

Starfleet Innotech  Business Development

Good diversification

The 3 months correlation between Starfleet and Business is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Starfleet Innotech and Business Development Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Business Development Corp and Starfleet Innotech 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 Starfleet Innotech are associated (or correlated) with Business Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Business Development Corp has no effect on the direction of Starfleet Innotech i.e., Starfleet Innotech and Business Development go up and down completely randomly.

Pair Corralation between Starfleet Innotech and Business Development

Given the investment horizon of 90 days Starfleet Innotech is expected to generate 1.97 times more return on investment than Business Development. However, Starfleet Innotech is 1.97 times more volatile than Business Development Corp. It trades about 0.04 of its potential returns per unit of risk. Business Development Corp is currently generating about 0.05 per unit of risk. If you would invest  0.70  in Starfleet Innotech on October 4, 2024 and sell it today you would lose (0.42) from holding Starfleet Innotech or give up 60.0% of portfolio value over 90 days.

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

Starfleet Innotech  vs.  Business Development Corp

Starfleet Innotech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Starfleet Innotech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Starfleet Innotech displayed solid returns over the last few months and may actually be approaching a breakup point.

Business Development Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Business Development Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Business Development exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Starfleet Innotech and Business Development

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

The idea behind Starfleet Innotech and Business Development Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..