Correlation Between Blue Star and DS Smith
Can any of the company-specific risk be diversified away by investing in both Blue Star and DS Smith 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 Blue Star and DS Smith into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Star Capital and DS Smith PLC, you can compare the effects of market volatilities on Blue Star and DS Smith 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 Blue Star with a short position of DS Smith. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and DS Smith.
Diversification Opportunities for Blue Star and DS Smith
Good diversification
The 3 months correlation between Blue and SMDS is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Capital and DS Smith PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DS Smith PLC and Blue 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 Blue Star Capital are associated (or correlated) with DS Smith. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DS Smith PLC has no effect on the direction of Blue Star i.e., Blue Star and DS Smith go up and down completely randomly.
Pair Corralation between Blue Star and DS Smith
Assuming the 90 days trading horizon Blue Star Capital is expected to generate 11.4 times more return on investment than DS Smith. However, Blue Star is 11.4 times more volatile than DS Smith PLC. It trades about 0.17 of its potential returns per unit of risk. DS Smith PLC is currently generating about -0.13 per unit of risk. If you would invest 1.25 in Blue Star Capital on September 20, 2024 and sell it today you would earn a total of 0.50 from holding Blue Star Capital or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Blue Star Capital vs. DS Smith PLC
Performance |
| Timeline |
| Blue Star Capital |
| DS Smith PLC |
Blue Star and DS Smith Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Star and DS Smith
The main advantage of trading using opposite Blue Star and DS Smith positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Star position performs unexpectedly, DS Smith 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 DS Smith will offset losses from the drop in DS Smith's long position.| Blue Star vs. Catalyst Media Group | Blue Star vs. CATLIN GROUP | Blue Star vs. Tamburi Investment Partners | Blue Star vs. Magnora ASA |
| DS Smith vs. Cembra Money Bank | DS Smith vs. National Beverage Corp | DS Smith vs. Sabre Insurance Group | DS Smith vs. Young Cos Brewery |
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 Stocks Directory module to find actively traded stocks across global markets.
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