Correlation Between Star Entertainment and Star Combo

Can any of the company-specific risk be diversified away by investing in both Star Entertainment 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 Star Entertainment and Star Combo 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 Star Combo Pharma, you can compare the effects of market volatilities on Star Entertainment 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 Star Entertainment with a short position of Star Combo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Entertainment and Star Combo.

Diversification Opportunities for Star Entertainment and Star Combo

0.53

Correlation Coefficient

Star Entertainment  Star Combo

Very weak diversification

The 3 months correlation between Star and Star is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Star Entertainment Group 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 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 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 Star Entertainment i.e., Star Entertainment and Star Combo go up and down completely randomly.

Pair Corralation between Star Entertainment and Star Combo

Assuming the 90 days trading horizon Star Entertainment Group is expected to under-perform the Star Combo. In addition to that, Star Entertainment is 1.1 times more volatile than Star Combo Pharma. It trades about -0.15 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  14.00  in Star Combo Pharma on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Star Combo Pharma or generate 0.0% return on investment over 90 days.

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

Star Entertainment Group  vs.  Star Combo Pharma

Star Entertainment

Risk-Adjusted Performance

0 of 100

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 Star Entertainment and Star Combo

The main advantage of trading using opposite Star Entertainment and Star Combo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Entertainment 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 Star Entertainment Group 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.