Correlation Between Molson Coors and Stardust Power

Can any of the company-specific risk be diversified away by investing in both Molson Coors and Stardust Power 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 Molson Coors and Stardust Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Molson Coors Brewing and Stardust Power, you can compare the effects of market volatilities on Molson Coors and Stardust Power 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 Molson Coors with a short position of Stardust Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Stardust Power.

Diversification Opportunities for Molson Coors and Stardust Power

-0.58

Correlation Coefficient

Molson Coors  Stardust Power

Excellent diversification

The 3 months correlation between Molson and Stardust is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Stardust Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stardust Power and Molson Coors 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 Molson Coors Brewing are associated (or correlated) with Stardust Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stardust Power has no effect on the direction of Molson Coors i.e., Molson Coors and Stardust Power go up and down completely randomly.

Pair Corralation between Molson Coors and Stardust Power

Considering the 90-day investment horizon Molson Coors Brewing is expected to generate 0.09 times more return on investment than Stardust Power. However, Molson Coors Brewing is 10.55 times less risky than Stardust Power. It trades about 0.09 of its potential returns per unit of risk. Stardust Power is currently generating about 0.0 per unit of risk. If you would invest  5,690  in Molson Coors Brewing on August 31, 2024 and sell it today you would earn a total of  435.00  from holding Molson Coors Brewing or generate 7.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.37%
Values	Daily Returns

Molson Coors Brewing  vs.  Stardust Power

Molson Coors Brewing

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Stardust Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stardust Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Stardust Power is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Molson Coors and Stardust Power

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

The idea behind Molson Coors Brewing and Stardust Power 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.