Correlation Between Applied DNA and Star Equity
Can any of the company-specific risk be diversified away by investing in both Applied DNA and Star Equity 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 Applied DNA and Star Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied DNA Sciences and Star Equity Holdings, you can compare the effects of market volatilities on Applied DNA and Star Equity 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 Applied DNA with a short position of Star Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied DNA and Star Equity.
Diversification Opportunities for Applied DNA and Star Equity
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Star is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Applied DNA Sciences and Star Equity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Equity Holdings and Applied DNA 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 Applied DNA Sciences are associated (or correlated) with Star Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Equity Holdings has no effect on the direction of Applied DNA i.e., Applied DNA and Star Equity go up and down completely randomly.
Pair Corralation between Applied DNA and Star Equity
Given the investment horizon of 90 days Applied DNA Sciences is expected to generate 1.22 times more return on investment than Star Equity. However, Applied DNA is 1.22 times more volatile than Star Equity Holdings. It trades about -0.21 of its potential returns per unit of risk. Star Equity Holdings is currently generating about -0.39 per unit of risk. If you would invest 18.00 in Applied DNA Sciences on September 4, 2024 and sell it today you would lose (3.00) from holding Applied DNA Sciences or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied DNA Sciences vs. Star Equity Holdings
Performance |
| Timeline |
| Applied DNA Sciences |
| Star Equity Holdings |
Applied DNA and Star Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied DNA and Star Equity
The main advantage of trading using opposite Applied DNA and Star Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied DNA position performs unexpectedly, Star Equity 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 Equity will offset losses from the drop in Star Equity's long position.| Applied DNA vs. Biodesix | Applied DNA vs. DarioHealth Corp | Applied DNA vs. Exagen Inc | Applied DNA vs. Burning Rock Biotech |
| Star Equity vs. Volitionrx | Star Equity vs. Biodesix | Star Equity vs. Fonar | Star Equity vs. Burning Rock Biotech |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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