Correlation Between North Star and Alphacentric Lifesci

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

By analyzing existing cross correlation between North Star Micro and Alphacentric Lifesci Healthcare, you can compare the effects of market volatilities on North Star and Alphacentric Lifesci 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 North Star with a short position of Alphacentric Lifesci. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Star and Alphacentric Lifesci.

Diversification Opportunities for North Star and Alphacentric Lifesci

0.18

Correlation Coefficient

North Star  Alphacentric Lifesci

Average diversification

The 3 months correlation between North and Alphacentric is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding North Star Micro and Alphacentric Lifesci Healthcar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphacentric Lifesci and North 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 North Star Micro are associated (or correlated) with Alphacentric Lifesci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphacentric Lifesci has no effect on the direction of North Star i.e., North Star and Alphacentric Lifesci go up and down completely randomly.

Pair Corralation between North Star and Alphacentric Lifesci

Assuming the 90 days horizon North Star Micro is expected to generate 1.62 times more return on investment than Alphacentric Lifesci. However, North Star is 1.62 times more volatile than Alphacentric Lifesci Healthcare. It trades about -0.25 of its potential returns per unit of risk. Alphacentric Lifesci Healthcare is currently generating about -0.46 per unit of risk. If you would invest  4,468  in North Star Micro on September 29, 2024 and sell it today you would lose (291.00) from holding North Star Micro or give up 6.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

North Star Micro  vs.  Alphacentric Lifesci Healthcar

North Star Micro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Star Micro has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, North Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alphacentric Lifesci

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphacentric Lifesci Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with North Star and Alphacentric Lifesci

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

The idea behind North Star Micro and Alphacentric Lifesci Healthcare 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.