Correlation Between Star Alliance and Healthcare Triangle

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

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

Diversification Opportunities for Star Alliance and Healthcare Triangle

-0.16

Correlation Coefficient

Star Alliance  Healthcare Triangle

Good diversification

The 3 months correlation between Star and Healthcare is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Star Alliance International and Healthcare Triangle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Triangle and Star Alliance 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 Alliance International are associated (or correlated) with Healthcare Triangle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Triangle has no effect on the direction of Star Alliance i.e., Star Alliance and Healthcare Triangle go up and down completely randomly.

Pair Corralation between Star Alliance and Healthcare Triangle

Given the investment horizon of 90 days Star Alliance International is expected to under-perform the Healthcare Triangle. But the pink sheet apears to be less risky and, when comparing its historical volatility, Star Alliance International is 1.32 times less risky than Healthcare Triangle. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Healthcare Triangle is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  48.00  in Healthcare Triangle on September 29, 2024 and sell it today you would earn a total of  32.00  from holding Healthcare Triangle or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Star Alliance International  vs.  Healthcare Triangle

Star Alliance Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Alliance International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Healthcare Triangle

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Triangle are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Healthcare Triangle demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Star Alliance and Healthcare Triangle

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

The idea behind Star Alliance International and Healthcare Triangle 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.