Correlation Between Star Petroleum and Micro Leasing
Can any of the company-specific risk be diversified away by investing in both Star Petroleum and Micro Leasing 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 Petroleum and Micro Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Petroleum Refining and Micro Leasing Public, you can compare the effects of market volatilities on Star Petroleum and Micro Leasing 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 Petroleum with a short position of Micro Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Petroleum and Micro Leasing.
Diversification Opportunities for Star Petroleum and Micro Leasing
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Star and Micro is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Star Petroleum Refining and Micro Leasing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Leasing Public and Star Petroleum 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 Petroleum Refining are associated (or correlated) with Micro Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Leasing Public has no effect on the direction of Star Petroleum i.e., Star Petroleum and Micro Leasing go up and down completely randomly.
Pair Corralation between Star Petroleum and Micro Leasing
Assuming the 90 days trading horizon Star Petroleum Refining is expected to generate 1.35 times more return on investment than Micro Leasing. However, Star Petroleum is 1.35 times more volatile than Micro Leasing Public. It trades about -0.27 of its potential returns per unit of risk. Micro Leasing Public is currently generating about -0.42 per unit of risk. If you would invest 809.00 in Star Petroleum Refining on September 2, 2024 and sell it today you would lose (134.00) from holding Star Petroleum Refining or give up 16.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.64% |
| Values | Daily Returns |
Star Petroleum Refining vs. Micro Leasing Public
Performance |
| Timeline |
| Star Petroleum Refining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Micro Leasing Public |
Star Petroleum and Micro Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Petroleum and Micro Leasing
The main advantage of trading using opposite Star Petroleum and Micro Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Petroleum position performs unexpectedly, Micro Leasing 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 Micro Leasing will offset losses from the drop in Micro Leasing's long position.| Star Petroleum vs. LH Shopping Centers | Star Petroleum vs. HEMARAJ INDUSTRIAL PROPERTY | Star Petroleum vs. Land and Houses |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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