Correlation Between Star Equity and Applied DNA
Can any of the company-specific risk be diversified away by investing in both Star Equity and Applied DNA 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 Equity and Applied DNA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Equity Holdings and Applied DNA Sciences, you can compare the effects of market volatilities on Star Equity and Applied DNA 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 Equity with a short position of Applied DNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Equity and Applied DNA.
Diversification Opportunities for Star Equity and Applied DNA
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Star and Applied is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Star Equity Holdings and Applied DNA Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied DNA Sciences and Star Equity 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 Equity Holdings are associated (or correlated) with Applied DNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied DNA Sciences has no effect on the direction of Star Equity i.e., Star Equity and Applied DNA go up and down completely randomly.
Pair Corralation between Star Equity and Applied DNA
Given the investment horizon of 90 days Star Equity Holdings is expected to under-perform the Applied DNA. But the stock apears to be less risky and, when comparing its historical volatility, Star Equity Holdings is 1.22 times less risky than Applied DNA. The stock trades about -0.39 of its potential returns per unit of risk. The Applied DNA Sciences is currently generating about -0.21 of returns per unit of risk over similar time horizon. 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 |
Star Equity Holdings vs. Applied DNA Sciences
Performance |
| Timeline |
| Star Equity Holdings |
| Applied DNA Sciences |
Star Equity and Applied DNA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Equity and Applied DNA
The main advantage of trading using opposite Star Equity and Applied DNA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Equity position performs unexpectedly, Applied DNA 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 Applied DNA will offset losses from the drop in Applied DNA's long position.| Star Equity vs. Volitionrx | Star Equity vs. Biodesix | Star Equity vs. Fonar | Star Equity vs. Burning Rock Biotech |
| Applied DNA vs. Biodesix | Applied DNA vs. DarioHealth Corp | Applied DNA vs. Exagen Inc | Applied DNA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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