Correlation Between Star Equity and Biodesix

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

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

Diversification Opportunities for Star Equity and Biodesix

0.6

Correlation Coefficient

Star Equity  Biodesix

Poor diversification

The 3 months correlation between Star and Biodesix is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Star Equity Holdings and Biodesix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biodesix and Star Equity 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 Equity Holdings are associated (or correlated) with Biodesix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biodesix has no effect on the direction of Star Equity i.e., Star Equity and Biodesix go up and down completely randomly.

Pair Corralation between Star Equity and Biodesix

Assuming the 90 days horizon Star Equity Holdings is expected to generate 0.42 times more return on investment than Biodesix. However, Star Equity Holdings is 2.38 times less risky than Biodesix. It trades about -0.01 of its potential returns per unit of risk. Biodesix is currently generating about -0.07 per unit of risk. If you would invest  965.00  in Star Equity Holdings on September 2, 2024 and sell it today you would lose (23.00) from holding Star Equity Holdings or give up 2.38% of portfolio value over 90 days.

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

Star Equity Holdings  vs.  Biodesix

Star Equity Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Equity Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Star Equity is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Biodesix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biodesix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly 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.

Pair Trading with Star Equity and Biodesix

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

The idea behind Star Equity Holdings and Biodesix 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.