Correlation Between Safe T and Norstar

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

By analyzing existing cross correlation between Safe T Group and Norstar, you can compare the effects of market volatilities on Safe T and Norstar 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 Safe T with a short position of Norstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safe T and Norstar.

Diversification Opportunities for Safe T and Norstar

-0.54

Correlation Coefficient

Safe T  Norstar

Excellent diversification

The 3 months correlation between Safe and Norstar is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Safe T Group and Norstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norstar and Safe T 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 Safe T Group are associated (or correlated) with Norstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norstar has no effect on the direction of Safe T i.e., Safe T and Norstar go up and down completely randomly.

Pair Corralation between Safe T and Norstar

Assuming the 90 days trading horizon Safe T Group is expected to generate 1.36 times more return on investment than Norstar. However, Safe T is 1.36 times more volatile than Norstar. It trades about 0.09 of its potential returns per unit of risk. Norstar is currently generating about -0.06 per unit of risk. If you would invest  19,870  in Safe T Group on February 3, 2024 and sell it today you would earn a total of  80,230  from holding Safe T Group or generate 403.77% return on investment over 90 days.

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

Safe T Group  vs.  Norstar

Safe T Group

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Safe T Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Safe T sustained solid returns over the last few months and may actually be approaching a breakup point.

Norstar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norstar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Norstar is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Safe T and Norstar

The main advantage of trading using opposite Safe T and Norstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe T position performs unexpectedly, Norstar 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 Norstar will offset losses from the drop in Norstar's long position.

The idea behind Safe T Group and Norstar 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.