Correlation Between Starco Brands and Perimeter Solutions

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

By analyzing existing cross correlation between Starco Brands and Perimeter Solutions SA, you can compare the effects of market volatilities on Starco Brands and Perimeter Solutions 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 Starco Brands with a short position of Perimeter Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starco Brands and Perimeter Solutions.

Diversification Opportunities for Starco Brands and Perimeter Solutions

-0.36

Correlation Coefficient

Starco Brands  Perimeter Solutions

Very good diversification

The 3 months correlation between Starco and Perimeter is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Starco Brands and Perimeter Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perimeter Solutions and Starco Brands 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 Starco Brands are associated (or correlated) with Perimeter Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perimeter Solutions has no effect on the direction of Starco Brands i.e., Starco Brands and Perimeter Solutions go up and down completely randomly.

Pair Corralation between Starco Brands and Perimeter Solutions

Given the investment horizon of 90 days Starco Brands is expected to under-perform the Perimeter Solutions. In addition to that, Starco Brands is 3.23 times more volatile than Perimeter Solutions SA. It trades about -0.04 of its total potential returns per unit of risk. Perimeter Solutions SA is currently generating about 0.09 per unit of volatility. If you would invest  1,139  in Perimeter Solutions SA on September 4, 2024 and sell it today you would earn a total of  150.00  from holding Perimeter Solutions SA or generate 13.17% return on investment over 90 days.

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

Starco Brands  vs.  Perimeter Solutions SA

Starco Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starco Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Perimeter Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perimeter Solutions SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Perimeter Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Starco Brands and Perimeter Solutions

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

The idea behind Starco Brands and Perimeter Solutions SA 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.