Correlation Between Star Diamond and Advent Wireless

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

By analyzing existing cross correlation between Star Diamond Corp and Advent Wireless, you can compare the effects of market volatilities on Star Diamond and Advent Wireless 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 Diamond with a short position of Advent Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Diamond and Advent Wireless.

Diversification Opportunities for Star Diamond and Advent Wireless

-0.31

Correlation Coefficient

Star Diamond  Advent Wireless

Very good diversification

The 3 months correlation between Star and Advent is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Star Diamond Corp and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless and Star Diamond 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 Diamond Corp are associated (or correlated) with Advent Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Wireless has no effect on the direction of Star Diamond i.e., Star Diamond and Advent Wireless go up and down completely randomly.

Pair Corralation between Star Diamond and Advent Wireless

Assuming the 90 days trading horizon Star Diamond Corp is expected to generate 3.39 times more return on investment than Advent Wireless. However, Star Diamond is 3.39 times more volatile than Advent Wireless. It trades about 0.03 of its potential returns per unit of risk. Advent Wireless is currently generating about -0.07 per unit of risk. If you would invest  6.00  in Star Diamond Corp on April 23, 2025 and sell it today you would lose (0.50) from holding Star Diamond Corp or give up 8.33% of portfolio value over 90 days.

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

Star Diamond Corp  vs.  Advent Wireless

Star Diamond Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Star Diamond Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Star Diamond displayed solid returns over the last few months and may actually be approaching a breakup point.

Advent Wireless

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advent Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Star Diamond and Advent Wireless

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

The idea behind Star Diamond Corp and Advent Wireless 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.