Correlation Between Star Equity and Cadiz Depositary

Can any of the company-specific risk be diversified away by investing in both Star Equity and Cadiz Depositary 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 Cadiz Depositary 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 Cadiz Depositary Shares, you can compare the effects of market volatilities on Star Equity and Cadiz Depositary 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 Cadiz Depositary. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Equity and Cadiz Depositary.

Diversification Opportunities for Star Equity and Cadiz Depositary

-0.34

Correlation Coefficient

Star Equity  Cadiz Depositary

Very good diversification

The 3 months correlation between Star and Cadiz is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Star Equity Holdings and Cadiz Depositary Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadiz Depositary Shares 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 Cadiz Depositary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadiz Depositary Shares has no effect on the direction of Star Equity i.e., Star Equity and Cadiz Depositary go up and down completely randomly.

Pair Corralation between Star Equity and Cadiz Depositary

Assuming the 90 days horizon Star Equity is expected to generate 2.54 times less return on investment than Cadiz Depositary. In addition to that, Star Equity is 1.29 times more volatile than Cadiz Depositary Shares. It trades about 0.02 of its total potential returns per unit of risk. Cadiz Depositary Shares is currently generating about 0.08 per unit of volatility. If you would invest  1,265  in Cadiz Depositary Shares on September 15, 2024 and sell it today you would earn a total of  422.00  from holding Cadiz Depositary Shares or generate 33.36% return on investment over 90 days.

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

Star Equity Holdings  vs.  Cadiz Depositary Shares

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 relatively invariable basic indicators, Star Equity is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Cadiz Depositary Shares

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cadiz Depositary Shares are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Cadiz Depositary reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Star Equity and Cadiz Depositary

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

The idea behind Star Equity Holdings and Cadiz Depositary Shares 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.