Correlation Between Star Media and Nova Wellness
Can any of the company-specific risk be diversified away by investing in both Star Media and Nova Wellness 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 Media and Nova Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Media Group and Nova Wellness Group, you can compare the effects of market volatilities on Star Media and Nova Wellness 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 Media with a short position of Nova Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Media and Nova Wellness.
Diversification Opportunities for Star Media and Nova Wellness
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Star and Nova is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Star Media Group and Nova Wellness Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Wellness Group and Star Media 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 Media Group are associated (or correlated) with Nova Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Wellness Group has no effect on the direction of Star Media i.e., Star Media and Nova Wellness go up and down completely randomly.
Pair Corralation between Star Media and Nova Wellness
Assuming the 90 days trading horizon Star Media Group is expected to generate 0.61 times more return on investment than Nova Wellness. However, Star Media Group is 1.64 times less risky than Nova Wellness. It trades about -0.09 of its potential returns per unit of risk. Nova Wellness Group is currently generating about -0.07 per unit of risk. If you would invest 42.00 in Star Media Group on October 17, 2024 and sell it today you would lose (2.00) from holding Star Media Group or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Star Media Group vs. Nova Wellness Group
Performance |
| Timeline |
| Star Media Group |
| Nova Wellness Group |
Star Media and Nova Wellness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Media and Nova Wellness
The main advantage of trading using opposite Star Media and Nova Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Media position performs unexpectedly, Nova Wellness 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 Nova Wellness will offset losses from the drop in Nova Wellness' long position.The idea behind Star Media Group and Nova Wellness Group 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.| Nova Wellness vs. Malayan Banking Bhd | Nova Wellness vs. Star Media Group | Nova Wellness vs. Sports Toto Berhad | Nova Wellness vs. PMB Technology Bhd |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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