Correlation Between Star Diamond and ACT Energy

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

Diversification Opportunities for Star Diamond and ACT Energy

-0.22

Correlation Coefficient

Star Diamond  ACT Energy

Very good diversification

The 3 months correlation between Star and ACT is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Star Diamond Corp and ACT Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACT Energy Technologies 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 ACT Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACT Energy Technologies has no effect on the direction of Star Diamond i.e., Star Diamond and ACT Energy go up and down completely randomly.

Pair Corralation between Star Diamond and ACT Energy

Assuming the 90 days trading horizon Star Diamond Corp is expected to generate 4.27 times more return on investment than ACT Energy. However, Star Diamond is 4.27 times more volatile than ACT Energy Technologies. It trades about 0.0 of its potential returns per unit of risk. ACT Energy Technologies is currently generating about -0.02 per unit of risk. If you would invest  6.00  in Star Diamond Corp on May 19, 2025 and sell it today you would lose (1.00) from holding Star Diamond Corp or give up 16.67% 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.  ACT Energy Technologies

Star Diamond Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Star Diamond Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Star Diamond is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ACT Energy Technologies

Risk-Adjusted Performance

Weakest

Over the last 90 days ACT Energy Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ACT Energy 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 ACT Energy

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

The idea behind Star Diamond Corp and ACT Energy Technologies 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.