Correlation Between UDR and Star Jets

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

By analyzing existing cross correlation between UDR Inc and Star Jets International, you can compare the effects of market volatilities on UDR and Star Jets 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 UDR with a short position of Star Jets. Check out your portfolio center. Please also check ongoing floating volatility patterns of UDR and Star Jets.

Diversification Opportunities for UDR and Star Jets

0.34

Correlation Coefficient

UDR  Star Jets

Weak diversification

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

Pair Corralation between UDR and Star Jets

Considering the 90-day investment horizon UDR is expected to generate 41.4 times less return on investment than Star Jets. But when comparing it to its historical volatility, UDR Inc is 18.76 times less risky than Star Jets. It trades about 0.05 of its potential returns per unit of risk. Star Jets International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.65  in Star Jets International on September 2, 2024 and sell it today you would earn a total of  0.35  from holding Star Jets International or generate 21.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

UDR Inc  vs.  Star Jets International

UDR Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UDR Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, UDR is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Star Jets International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Star Jets International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Star Jets reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UDR and Star Jets

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

The idea behind UDR Inc and Star Jets International 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.