Correlation Between Stars Microelectronics and Central Retail

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

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

Diversification Opportunities for Stars Microelectronics and Central Retail

-0.23

Correlation Coefficient

Stars Microelectronics  Central Retail

Very good diversification

The 3 months correlation between Stars and Central is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Stars Microelectronics Public and Central Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Retail and Stars Microelectronics 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 Stars Microelectronics Public are associated (or correlated) with Central Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Retail has no effect on the direction of Stars Microelectronics i.e., Stars Microelectronics and Central Retail go up and down completely randomly.

Pair Corralation between Stars Microelectronics and Central Retail

Assuming the 90 days trading horizon Stars Microelectronics Public is expected to generate 31.52 times more return on investment than Central Retail. However, Stars Microelectronics is 31.52 times more volatile than Central Retail. It trades about 0.05 of its potential returns per unit of risk. Central Retail is currently generating about -0.02 per unit of risk. If you would invest  378.00  in Stars Microelectronics Public on September 14, 2024 and sell it today you would lose (208.00) from holding Stars Microelectronics Public or give up 55.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.62%
Values	Daily Returns

Stars Microelectronics Public  vs.  Central Retail

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 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.

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Stars Microelectronics and Central Retail

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

The idea behind Stars Microelectronics Public and Central Retail 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.