Can any of the company-specific risk be diversified away by investing in both Starbox Group and Golden Energy 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 Starbox Group and Golden Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbox Group Holdings and Golden Energy Offshore, you can compare the effects of market volatilities on Starbox Group and Golden Energy 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 Starbox Group with a short position of Golden Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbox Group and Golden Energy.
Diversification Opportunities for Starbox Group and Golden Energy
The 3 months correlation between Starbox and Golden is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Starbox Group Holdings and Golden Energy Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Energy Offshore and Starbox Group 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 Starbox Group Holdings are associated (or correlated) with Golden Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Energy Offshore has no effect on the direction of Starbox Group i.e., Starbox Group and Golden Energy go up and down completely randomly.
Pair Corralation between Starbox Group and Golden Energy
Given the investment horizon of 90 days Starbox Group Holdings is expected to under-perform the Golden Energy. But the stock apears to be less risky and, when comparing its historical volatility, Starbox Group Holdings is 5.77 times less risky than Golden Energy. The stock trades about -0.09 of its potential returns per unit of risk. The Golden Energy Offshore is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Golden Energy Offshore on March 6, 2024 and sell it today you would earn a total of 317.00 from holding Golden Energy Offshore or generate 2438.46% return on investment over 90 days.
Over the last 90 days Starbox Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Golden Energy Offshore are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Golden Energy reported solid returns over the last few months and may actually be approaching a breakup point.