Correlation Between ProStar Holdings and Issuer Direct

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

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

Diversification Opportunities for ProStar Holdings and Issuer Direct

0.73

Correlation Coefficient

ProStar Holdings  Issuer Direct

Poor diversification

The 3 months correlation between ProStar and Issuer is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ProStar Holdings and Issuer Direct Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Issuer Direct Corp and ProStar 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 ProStar Holdings are associated (or correlated) with Issuer Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Issuer Direct Corp has no effect on the direction of ProStar Holdings i.e., ProStar Holdings and Issuer Direct go up and down completely randomly.

Pair Corralation between ProStar Holdings and Issuer Direct

Assuming the 90 days horizon ProStar Holdings is expected to generate 2.87 times more return on investment than Issuer Direct. However, ProStar Holdings is 2.87 times more volatile than Issuer Direct Corp. It trades about -0.02 of its potential returns per unit of risk. Issuer Direct Corp is currently generating about -0.08 per unit of risk. If you would invest  12.00  in ProStar Holdings on September 22, 2024 and sell it today you would lose (2.91) from holding ProStar Holdings or give up 24.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

ProStar Holdings  vs.  Issuer Direct Corp

ProStar Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProStar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Issuer Direct Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Issuer Direct Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with ProStar Holdings and Issuer Direct

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

The idea behind ProStar Holdings and Issuer Direct Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.