Correlation Between Color Star and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both Color Star and Consolidated Communications 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 Color Star and Consolidated Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Color Star Technology and Consolidated Communications, you can compare the effects of market volatilities on Color Star and Consolidated Communications 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 Color Star with a short position of Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Color Star and Consolidated Communications.
Diversification Opportunities for Color Star and Consolidated Communications
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Color and Consolidated is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Color Star Technology and Consolidated Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications and Color Star 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 Color Star Technology are associated (or correlated) with Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of Color Star i.e., Color Star and Consolidated Communications go up and down completely randomly.
Pair Corralation between Color Star and Consolidated Communications
Considering the 90-day investment horizon Color Star Technology is expected to under-perform the Consolidated Communications. In addition to that, Color Star is 3.02 times more volatile than Consolidated Communications. It trades about -0.01 of its total potential returns per unit of risk. Consolidated Communications is currently generating about 0.02 per unit of volatility. If you would invest 420.00 in Consolidated Communications on August 27, 2024 and sell it today you would earn a total of 43.00 from holding Consolidated Communications or generate 10.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Color Star Technology vs. Consolidated Communications
Performance |
| Timeline |
| Color Star Technology |
| Consolidated Communications |
Color Star and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Color Star and Consolidated Communications
The main advantage of trading using opposite Color Star and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Color Star position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| Color Star vs. ADTRAN Inc | Color Star vs. Belden Inc | Color Star vs. ADC Therapeutics SA | Color Star vs. Comtech Telecommunications Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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