Correlation Between DFS Furniture and Blue Star

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

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

Diversification Opportunities for DFS Furniture and Blue Star

0.55

Correlation Coefficient

DFS Furniture  Blue Star

Very weak diversification

The 3 months correlation between DFS and Blue is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Blue Star Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Star Capital and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with Blue Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Star Capital has no effect on the direction of DFS Furniture i.e., DFS Furniture and Blue Star go up and down completely randomly.

Pair Corralation between DFS Furniture and Blue Star

Assuming the 90 days trading horizon DFS Furniture is expected to generate 7.96 times less return on investment than Blue Star. But when comparing it to its historical volatility, DFS Furniture PLC is 14.3 times less risky than Blue Star. It trades about 0.27 of its potential returns per unit of risk. Blue Star Capital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  525.00  in Blue Star Capital on April 21, 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	Weak
Accuracy	100.0%
Values	Daily Returns

DFS Furniture PLC  vs.  Blue Star Capital

DFS Furniture PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DFS Furniture PLC are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, DFS Furniture exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with DFS Furniture and Blue Star

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

The idea behind DFS Furniture PLC and Blue Star Capital 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.