Correlation Between Blue Star and Draper Esprit

Can any of the company-specific risk be diversified away by investing in both Blue Star and Draper Esprit 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 Blue Star and Draper Esprit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Star Capital and Draper Esprit PLC, you can compare the effects of market volatilities on Blue Star and Draper Esprit 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 Blue Star with a short position of Draper Esprit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and Draper Esprit.

Diversification Opportunities for Blue Star and Draper Esprit

0.63

Correlation Coefficient

Blue Star  Draper Esprit

Poor diversification

The 3 months correlation between Blue and Draper is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Capital and Draper Esprit PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Draper Esprit PLC and Blue Star 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 Blue Star Capital are associated (or correlated) with Draper Esprit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Draper Esprit PLC has no effect on the direction of Blue Star i.e., Blue Star and Draper Esprit go up and down completely randomly.

Pair Corralation between Blue Star and Draper Esprit

Assuming the 90 days trading horizon Blue Star Capital is expected to generate 9.45 times more return on investment than Draper Esprit. However, Blue Star is 9.45 times more volatile than Draper Esprit PLC. It trades about 0.15 of its potential returns per unit of risk. Draper Esprit PLC is currently generating about 0.2 per unit of risk. If you would invest  525.00  in Blue Star Capital on April 22, 2025 and sell it today you would earn a total of  1,175  from holding Blue Star Capital or generate 223.81% return on investment over 90 days.

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

Blue Star Capital  vs.  Draper Esprit PLC

Blue Star Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Capital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Blue Star exhibited solid returns over the last few months and may actually be approaching a breakup point.

Draper Esprit PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Draper Esprit PLC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Draper Esprit unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Star and Draper Esprit

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

The idea behind Blue Star Capital and Draper Esprit PLC 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.