Correlation Between Star Entertainment and Cochlear

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

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

Diversification Opportunities for Star Entertainment and Cochlear

0.03

Correlation Coefficient

Star Entertainment  Cochlear

Significant diversification

The 3 months correlation between Star and Cochlear is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Star Entertainment Group and Cochlear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cochlear and Star Entertainment 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 Star Entertainment Group are associated (or correlated) with Cochlear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cochlear has no effect on the direction of Star Entertainment i.e., Star Entertainment and Cochlear go up and down completely randomly.

Pair Corralation between Star Entertainment and Cochlear

Assuming the 90 days trading horizon Star Entertainment Group is expected to under-perform the Cochlear. In addition to that, Star Entertainment is 3.58 times more volatile than Cochlear. It trades about -0.08 of its total potential returns per unit of risk. Cochlear is currently generating about -0.04 per unit of volatility. If you would invest  28,994  in Cochlear on December 21, 2024 and sell it today you would lose (1,856) from holding Cochlear or give up 6.4% of portfolio value over 90 days.

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

Star Entertainment Group  vs.  Cochlear

Star Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Star Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cochlear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cochlear has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Cochlear 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 Star Entertainment and Cochlear

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

The idea behind Star Entertainment Group and Cochlear 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.