Correlation Between Star Equity and Enzo Biochem

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

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

Diversification Opportunities for Star Equity and Enzo Biochem

0.59

Correlation Coefficient

Star Equity  Enzo Biochem

Very weak diversification

The 3 months correlation between Star and Enzo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Star Equity Holdings and Enzo Biochem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enzo Biochem and Star Equity 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 Star Equity Holdings are associated (or correlated) with Enzo Biochem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enzo Biochem has no effect on the direction of Star Equity i.e., Star Equity and Enzo Biochem go up and down completely randomly.

Pair Corralation between Star Equity and Enzo Biochem

Given the investment horizon of 90 days Star Equity Holdings is expected to under-perform the Enzo Biochem. But the stock apears to be less risky and, when comparing its historical volatility, Star Equity Holdings is 1.45 times less risky than Enzo Biochem. The stock trades about -0.33 of its potential returns per unit of risk. The Enzo Biochem is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  102.00  in Enzo Biochem on September 29, 2024 and sell it today you would lose (31.00) from holding Enzo Biochem or give up 30.39% of portfolio value over 90 days.

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

Star Equity Holdings  vs.  Enzo Biochem

Star Equity Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Equity Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic 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.

Enzo Biochem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enzo Biochem has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Star Equity and Enzo Biochem

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

The idea behind Star Equity Holdings and Enzo Biochem 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.