Correlation Between Color Star and IHS Holding

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

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

Diversification Opportunities for Color Star and IHS Holding

-0.78

Correlation Coefficient

Color Star  IHS Holding

Pay attention - limited upside

The 3 months correlation between Color and IHS is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Color Star Technology and IHS Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHS Holding and Color 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 Color Star Technology are associated (or correlated) with IHS Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHS Holding has no effect on the direction of Color Star i.e., Color Star and IHS Holding go up and down completely randomly.

Pair Corralation between Color Star and IHS Holding

Considering the 90-day investment horizon Color Star Technology is expected to under-perform the IHS Holding. In addition to that, Color Star is 2.05 times more volatile than IHS Holding. It trades about -0.09 of its total potential returns per unit of risk. IHS Holding is currently generating about 0.17 per unit of volatility. If you would invest  345.00  in IHS Holding on January 18, 2025 and sell it today you would earn a total of  149.00  from holding IHS Holding or generate 43.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Color Star Technology  vs.  IHS Holding

Color Star Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Color Star Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

IHS Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IHS Holding are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical indicators, IHS Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Color Star and IHS Holding

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

The idea behind Color Star Technology and IHS Holding 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.