Correlation Between Star Equity and Fortress Biotech

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

Diversification Opportunities for Star Equity and Fortress Biotech

-0.12

Correlation Coefficient

Star Equity  Fortress Biotech

Good diversification

The 3 months correlation between Star and Fortress is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Star Equity Holdings and Fortress Biotech Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech Pref 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 Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech Pref has no effect on the direction of Star Equity i.e., Star Equity and Fortress Biotech go up and down completely randomly.

Pair Corralation between Star Equity and Fortress Biotech

Assuming the 90 days horizon Star Equity Holdings is expected to generate 0.47 times more return on investment than Fortress Biotech. However, Star Equity Holdings is 2.11 times less risky than Fortress Biotech. It trades about 0.02 of its potential returns per unit of risk. Fortress Biotech Pref is currently generating about -0.01 per unit of risk. If you would invest  852.00  in Star Equity Holdings on September 15, 2024 and sell it today you would earn a total of  59.00  from holding Star Equity Holdings or generate 6.92% 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.  Fortress Biotech Pref

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.

Fortress Biotech Pref

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech Pref are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Fortress Biotech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Star Equity and Fortress Biotech

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

The idea behind Star Equity Holdings and Fortress Biotech Pref 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.