Correlation Between Star Media and Central Industrial
Can any of the company-specific risk be diversified away by investing in both Star Media and Central Industrial 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 Central Industrial 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 Central Industrial Corp, you can compare the effects of market volatilities on Star Media and Central Industrial 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 Central Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Media and Central Industrial.
Diversification Opportunities for Star Media and Central Industrial
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Star and Central is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Star Media Group and Central Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Industrial Corp 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 Central Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Industrial Corp has no effect on the direction of Star Media i.e., Star Media and Central Industrial go up and down completely randomly.
Pair Corralation between Star Media and Central Industrial
Assuming the 90 days trading horizon Star Media Group is expected to generate 2.51 times more return on investment than Central Industrial. However, Star Media is 2.51 times more volatile than Central Industrial Corp. It trades about 0.07 of its potential returns per unit of risk. Central Industrial Corp is currently generating about 0.08 per unit of risk. If you would invest 40.00 in Star Media Group on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Star Media Group or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Star Media Group vs. Central Industrial Corp
Performance |
| Timeline |
| Star Media Group |
| Central Industrial Corp |
Star Media and Central Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Media and Central Industrial
The main advantage of trading using opposite Star Media and Central Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Media position performs unexpectedly, Central Industrial 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 Central Industrial will offset losses from the drop in Central Industrial's long position.| Star Media vs. Datasonic Group Bhd | Star Media vs. Malayan Banking Bhd | Star Media vs. JF Technology BHD | Star Media vs. Awanbiru Technology Bhd |
| Central Industrial vs. Sunway Construction Group | Central Industrial vs. JAKS Resources Bhd | Central Industrial vs. PESTECH International Bhd | Central Industrial vs. Tadmax Resources Berhad |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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