Correlation Between Star Equity and Regional Health

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

Diversification Opportunities for Star Equity and Regional Health

-0.37

Correlation Coefficient

Star Equity  Regional Health

Very good diversification

The 3 months correlation between Star and Regional is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Star Equity Holdings and Regional Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Health Prop 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 Regional Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Health Prop has no effect on the direction of Star Equity i.e., Star Equity and Regional Health go up and down completely randomly.

Pair Corralation between Star Equity and Regional Health

Assuming the 90 days horizon Star Equity Holdings is expected to under-perform the Regional Health. But the preferred stock apears to be less risky and, when comparing its historical volatility, Star Equity Holdings is 4.66 times less risky than Regional Health. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Regional Health Properties is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Regional Health Properties on September 5, 2024 and sell it today you would earn a total of  14.00  from holding Regional Health Properties or generate 30.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Star Equity Holdings  vs.  Regional Health Properties

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.

Regional Health Prop

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Health Properties are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Regional Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Star Equity and Regional Health

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

The idea behind Star Equity Holdings and Regional Health Properties 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.