Correlation Between Star Equity and Fonar

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

Diversification Opportunities for Star Equity and Fonar

-0.45

Correlation Coefficient

Star Equity  Fonar

Very good diversification

The 3 months correlation between Star and Fonar is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Star Equity Holdings and Fonar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonar 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 Fonar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fonar has no effect on the direction of Star Equity i.e., Star Equity and Fonar go up and down completely randomly.

Pair Corralation between Star Equity and Fonar

Assuming the 90 days horizon Star Equity Holdings is expected to generate 0.98 times more return on investment than Fonar. However, Star Equity Holdings is 1.03 times less risky than Fonar. It trades about 0.09 of its potential returns per unit of risk. Fonar is currently generating about -0.05 per unit of risk. If you would invest  869.00  in Star Equity Holdings on December 28, 2024 and sell it today you would earn a total of  83.00  from holding Star Equity Holdings or generate 9.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Star Equity Holdings  vs.  Fonar

Star Equity Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Star Equity Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Star Equity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fonar

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Star Equity and Fonar

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

The idea behind Star Equity Holdings and Fonar 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 Global Correlations module to find global opportunities by holding instruments from different markets.