Correlation Between Supermarket Income and Blue Star

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

By analyzing existing cross correlation between Supermarket Income REIT and Blue Star Capital, you can compare the effects of market volatilities on Supermarket Income and Blue Star 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 Supermarket Income with a short position of Blue Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Blue Star.

Diversification Opportunities for Supermarket Income and Blue Star

0.42

Correlation Coefficient

Supermarket Income  Blue Star

Very weak diversification

The 3 months correlation between Supermarket and Blue is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Blue Star Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Star Capital and Supermarket Income 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 Supermarket Income REIT are associated (or correlated) with Blue Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Star Capital has no effect on the direction of Supermarket Income i.e., Supermarket Income and Blue Star go up and down completely randomly.

Pair Corralation between Supermarket Income and Blue Star

Assuming the 90 days trading horizon Supermarket Income REIT is expected to generate 0.11 times more return on investment than Blue Star. However, Supermarket Income REIT is 8.85 times less risky than Blue Star. It trades about -0.09 of its potential returns per unit of risk. Blue Star Capital is currently generating about -0.01 per unit of risk. If you would invest  7,326  in Supermarket Income REIT on September 19, 2024 and sell it today you would lose (386.00) from holding Supermarket Income REIT or give up 5.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Supermarket Income REIT  vs.  Blue Star Capital

Supermarket Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supermarket Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Supermarket Income is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Blue Star Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Star Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Supermarket Income and Blue Star

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

The idea behind Supermarket Income REIT and Blue Star Capital 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 Commodity Directory module to find actively traded commodities issued by global exchanges.