Correlation Between Sparta Commercial and ProStar Holdings

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

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

Diversification Opportunities for Sparta Commercial and ProStar Holdings

0.66

Correlation Coefficient

Sparta Commercial  ProStar Holdings

Poor diversification

The 3 months correlation between Sparta and ProStar is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Commercial Services and ProStar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProStar Holdings and Sparta Commercial 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 Sparta Commercial Services are associated (or correlated) with ProStar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProStar Holdings has no effect on the direction of Sparta Commercial i.e., Sparta Commercial and ProStar Holdings go up and down completely randomly.

Pair Corralation between Sparta Commercial and ProStar Holdings

Given the investment horizon of 90 days Sparta Commercial Services is expected to generate 0.67 times more return on investment than ProStar Holdings. However, Sparta Commercial Services is 1.49 times less risky than ProStar Holdings. It trades about 0.12 of its potential returns per unit of risk. ProStar Holdings is currently generating about 0.06 per unit of risk. If you would invest  19.00  in Sparta Commercial Services on December 29, 2024 and sell it today you would earn a total of  9.00  from holding Sparta Commercial Services or generate 47.37% return on investment over 90 days.

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

Sparta Commercial Services  vs.  ProStar Holdings

Sparta Commercial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparta Commercial Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Sparta Commercial displayed solid returns over the last few months and may actually be approaching a breakup point.

ProStar Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProStar Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ProStar Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparta Commercial and ProStar Holdings

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

The idea behind Sparta Commercial Services and ProStar 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.