Correlation Between Star Diamond and Medical Facilities

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

Diversification Opportunities for Star Diamond and Medical Facilities

-0.04

Correlation Coefficient

Star Diamond  Medical Facilities

Good diversification

The 3 months correlation between Star and Medical is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Star Diamond Corp and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Star Diamond i.e., Star Diamond and Medical Facilities go up and down completely randomly.

Pair Corralation between Star Diamond and Medical Facilities

Assuming the 90 days trading horizon Star Diamond Corp is expected to generate 7.71 times more return on investment than Medical Facilities. However, Star Diamond is 7.71 times more volatile than Medical Facilities. It trades about 0.04 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.05 per unit of risk. If you would invest  6.00  in Star Diamond Corp on April 21, 2025 and sell it today you would earn a total of  0.00  from holding Star Diamond Corp or generate 0.0% return on investment over 90 days.

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

Star Diamond Corp  vs.  Medical Facilities

Star Diamond Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Star Diamond Corp are ranked lower than 3 (%) 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.

Medical Facilities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Medical Facilities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Star Diamond and Medical Facilities

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

The idea behind Star Diamond Corp and Medical Facilities 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.