Correlation Between Star Equity and AXIL Brands

Can any of the company-specific risk be diversified away by investing in both Star Equity and AXIL Brands 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 AXIL Brands 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 AXIL Brands, you can compare the effects of market volatilities on Star Equity and AXIL Brands 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 AXIL Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Equity and AXIL Brands.

Diversification Opportunities for Star Equity and AXIL Brands

-0.59

Correlation Coefficient

Star Equity  AXIL Brands

Excellent diversification

The 3 months correlation between Star and AXIL is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Star Equity Holdings and AXIL Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXIL Brands 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 AXIL Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXIL Brands has no effect on the direction of Star Equity i.e., Star Equity and AXIL Brands go up and down completely randomly.

Pair Corralation between Star Equity and AXIL Brands

Assuming the 90 days horizon Star Equity Holdings is expected to generate 0.38 times more return on investment than AXIL Brands. However, Star Equity Holdings is 2.66 times less risky than AXIL Brands. It trades about 0.04 of its potential returns per unit of risk. AXIL Brands is currently generating about 0.0 per unit of risk. If you would invest  789.00  in Star Equity Holdings on March 31, 2024 and sell it today you would earn a total of  276.00  from holding Star Equity Holdings or generate 34.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	22.18%
Values	Daily Returns

Star Equity Holdings  vs.  AXIL Brands

Star Equity Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Star Equity Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Star Equity reported solid returns over the last few months and may actually be approaching a breakup point.

AXIL Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXIL Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Star Equity and AXIL Brands

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

The idea behind Star Equity Holdings and AXIL Brands 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.