Correlation Between Global Helium and Starr Peak

Can any of the company-specific risk be diversified away by investing in both Global Helium and Starr Peak 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 Global Helium and Starr Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Helium Corp and Starr Peak Exploration, you can compare the effects of market volatilities on Global Helium and Starr Peak 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 Global Helium with a short position of Starr Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Helium and Starr Peak.

Diversification Opportunities for Global Helium and Starr Peak

0.49

Correlation Coefficient

Global Helium  Starr Peak

Very weak diversification

The 3 months correlation between Global and Starr is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Global Helium Corp and Starr Peak Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starr Peak Exploration and Global Helium 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 Global Helium Corp are associated (or correlated) with Starr Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starr Peak Exploration has no effect on the direction of Global Helium i.e., Global Helium and Starr Peak go up and down completely randomly.

Pair Corralation between Global Helium and Starr Peak

Assuming the 90 days horizon Global Helium Corp is expected to under-perform the Starr Peak. In addition to that, Global Helium is 1.92 times more volatile than Starr Peak Exploration. It trades about -0.08 of its total potential returns per unit of risk. Starr Peak Exploration is currently generating about -0.11 per unit of volatility. If you would invest  30.00  in Starr Peak Exploration on February 20, 2024 and sell it today you would lose (3.00) from holding Starr Peak Exploration or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Global Helium Corp  vs.  Starr Peak Exploration

Global Helium Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Helium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Global Helium is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Starr Peak Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starr Peak Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Starr Peak is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global Helium and Starr Peak

The main advantage of trading using opposite Global Helium and Starr Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Helium position performs unexpectedly, Starr Peak 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 Starr Peak will offset losses from the drop in Starr Peak's long position.

The idea behind Global Helium Corp and Starr Peak Exploration pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.