Correlation Between Defentect and Star8 Corp

Can any of the company-specific risk be diversified away by investing in both Defentect and Star8 Corp 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 Defentect and Star8 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Defentect Group and Star8 Corp, you can compare the effects of market volatilities on Defentect and Star8 Corp 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 Defentect with a short position of Star8 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defentect and Star8 Corp.

Diversification Opportunities for Defentect and Star8 Corp

0.37

Correlation Coefficient

Defentect  Star8 Corp

Weak diversification

The 3 months correlation between Defentect and Star8 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Defentect Group and Star8 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star8 Corp and Defentect 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 Defentect Group are associated (or correlated) with Star8 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star8 Corp has no effect on the direction of Defentect i.e., Defentect and Star8 Corp go up and down completely randomly.

Pair Corralation between Defentect and Star8 Corp

Given the investment horizon of 90 days Defentect Group is expected to generate 0.65 times more return on investment than Star8 Corp. However, Defentect Group is 1.55 times less risky than Star8 Corp. It trades about 0.02 of its potential returns per unit of risk. Star8 Corp is currently generating about -0.03 per unit of risk. If you would invest  0.48  in Defentect Group on April 23, 2025 and sell it today you would lose (0.03) from holding Defentect Group or give up 6.25% of portfolio value over 90 days.

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

Defentect Group  vs.  Star8 Corp

Defentect Group

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Defentect Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Defentect may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Star8 Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Star8 Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in August 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Defentect and Star8 Corp

The main advantage of trading using opposite Defentect and Star8 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defentect position performs unexpectedly, Star8 Corp 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 Star8 Corp will offset losses from the drop in Star8 Corp's long position.

The idea behind Defentect Group and Star8 Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..