Correlation Between STWC Holdings and Blue Diamond

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

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

Diversification Opportunities for STWC Holdings and Blue Diamond

0.0

Correlation Coefficient

STWC Holdings  Blue Diamond

Pay attention - limited upside

The 3 months correlation between STWC and Blue is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding STWC Holdings and Blue Diamond Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Diamond Ventures and STWC Holdings 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 STWC Holdings are associated (or correlated) with Blue Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Diamond Ventures has no effect on the direction of STWC Holdings i.e., STWC Holdings and Blue Diamond go up and down completely randomly.

Pair Corralation between STWC Holdings and Blue Diamond

If you would invest  0.03  in Blue Diamond Ventures on December 3, 2024 and sell it today you would lose (0.01) from holding Blue Diamond Ventures or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

STWC Holdings  vs.  Blue Diamond Ventures

STWC Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days STWC Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, STWC Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Blue Diamond Ventures

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Diamond Ventures are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Blue Diamond showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STWC Holdings and Blue Diamond

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

The idea behind STWC Holdings and Blue Diamond Ventures 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.