Correlation Between Central Retail and Stars Microelectronics

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

By analyzing existing cross correlation between Central Retail and Stars Microelectronics Public, you can compare the effects of market volatilities on Central Retail and Stars Microelectronics 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 Central Retail with a short position of Stars Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Retail and Stars Microelectronics.

Diversification Opportunities for Central Retail and Stars Microelectronics

-0.24

Correlation Coefficient

Central Retail  Stars Microelectronics

Very good diversification

The 3 months correlation between Central and Stars is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Central Retail and Stars Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stars Microelectronics and Central Retail 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 Central Retail are associated (or correlated) with Stars Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stars Microelectronics has no effect on the direction of Central Retail i.e., Central Retail and Stars Microelectronics go up and down completely randomly.

Pair Corralation between Central Retail and Stars Microelectronics

Assuming the 90 days trading horizon Central Retail is expected to generate 0.65 times more return on investment than Stars Microelectronics. However, Central Retail is 1.53 times less risky than Stars Microelectronics. It trades about 0.04 of its potential returns per unit of risk. Stars Microelectronics Public is currently generating about -0.07 per unit of risk. If you would invest  3,225  in Central Retail on September 15, 2024 and sell it today you would earn a total of  125.00  from holding Central Retail or generate 3.88% return on investment over 90 days.

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

Central Retail  vs.  Stars Microelectronics Public

Central Retail

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Central Retail are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Central Retail is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Stars Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stars Microelectronics Public 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 Central Retail and Stars Microelectronics

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

The idea behind Central Retail and Stars Microelectronics Public 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.