Correlation Between Eversafe Rubber and Star Media

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

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

Diversification Opportunities for Eversafe Rubber and Star Media

0.41

Correlation Coefficient

Eversafe Rubber  Star Media

Very weak diversification

The 3 months correlation between Eversafe and Star is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eversafe Rubber Bhd and Star Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Media Group and Eversafe Rubber 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 Eversafe Rubber Bhd are associated (or correlated) with Star Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Media Group has no effect on the direction of Eversafe Rubber i.e., Eversafe Rubber and Star Media go up and down completely randomly.

Pair Corralation between Eversafe Rubber and Star Media

Assuming the 90 days trading horizon Eversafe Rubber Bhd is expected to under-perform the Star Media. In addition to that, Eversafe Rubber is 2.36 times more volatile than Star Media Group. It trades about -0.07 of its total potential returns per unit of risk. Star Media Group is currently generating about -0.07 per unit of volatility. If you would invest  45.00  in Star Media Group on September 15, 2024 and sell it today you would lose (4.00) from holding Star Media Group or give up 8.89% of portfolio value over 90 days.

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

Eversafe Rubber Bhd  vs.  Star Media Group

Eversafe Rubber Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eversafe Rubber Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting 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.

Star Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Eversafe Rubber and Star Media

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

The idea behind Eversafe Rubber Bhd and Star Media Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.