Correlation Between Blue Star and Hammerson PLC
Can any of the company-specific risk be diversified away by investing in both Blue Star and Hammerson PLC 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 Blue Star and Hammerson PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Star Capital and Hammerson PLC, you can compare the effects of market volatilities on Blue Star and Hammerson PLC 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 Blue Star with a short position of Hammerson PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and Hammerson PLC.
Diversification Opportunities for Blue Star and Hammerson PLC
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Blue and Hammerson is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Capital and Hammerson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammerson PLC and Blue Star 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 Blue Star Capital are associated (or correlated) with Hammerson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammerson PLC has no effect on the direction of Blue Star i.e., Blue Star and Hammerson PLC go up and down completely randomly.
Pair Corralation between Blue Star and Hammerson PLC
Assuming the 90 days trading horizon Blue Star Capital is expected to generate 10.22 times more return on investment than Hammerson PLC. However, Blue Star is 10.22 times more volatile than Hammerson PLC. It trades about 0.17 of its potential returns per unit of risk. Hammerson PLC is currently generating about 0.05 per unit of risk. If you would invest 1.25 in Blue Star Capital on September 20, 2024 and sell it today you would earn a total of 0.50 from holding Blue Star Capital or generate 40.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.65% |
Values | Daily Returns |
Blue Star Capital vs. Hammerson PLC
Performance |
Timeline |
Blue Star Capital |
Hammerson PLC |
Blue Star and Hammerson PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Blue Star and Hammerson PLC
The main advantage of trading using opposite Blue Star and Hammerson PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Star position performs unexpectedly, Hammerson PLC 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 Hammerson PLC will offset losses from the drop in Hammerson PLC's long position.Blue Star vs. Catalyst Media Group | Blue Star vs. CATLIN GROUP | Blue Star vs. Tamburi Investment Partners | Blue Star vs. Magnora ASA |
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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.
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