Correlation Between MYFAIR GOLD and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both MYFAIR GOLD and Sterling Construction 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 MYFAIR GOLD and Sterling Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MYFAIR GOLD P and Sterling Construction, you can compare the effects of market volatilities on MYFAIR GOLD and Sterling Construction 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 MYFAIR GOLD with a short position of Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of MYFAIR GOLD and Sterling Construction.
Diversification Opportunities for MYFAIR GOLD and Sterling Construction
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MYFAIR and Sterling is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding MYFAIR GOLD P and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction and MYFAIR GOLD 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 MYFAIR GOLD P are associated (or correlated) with Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of MYFAIR GOLD i.e., MYFAIR GOLD and Sterling Construction go up and down completely randomly.
Pair Corralation between MYFAIR GOLD and Sterling Construction
Assuming the 90 days horizon MYFAIR GOLD is expected to generate 3.78 times less return on investment than Sterling Construction. In addition to that, MYFAIR GOLD is 1.08 times more volatile than Sterling Construction. It trades about 0.06 of its total potential returns per unit of risk. Sterling Construction is currently generating about 0.24 per unit of volatility. If you would invest 10,650 in Sterling Construction on September 2, 2024 and sell it today you would earn a total of 7,660 from holding Sterling Construction or generate 71.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MYFAIR GOLD P vs. Sterling Construction
Performance |
| Timeline |
| MYFAIR GOLD P |
| Sterling Construction |
MYFAIR GOLD and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MYFAIR GOLD and Sterling Construction
The main advantage of trading using opposite MYFAIR GOLD and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MYFAIR GOLD position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.| MYFAIR GOLD vs. DeVry Education Group | MYFAIR GOLD vs. Perdoceo Education | MYFAIR GOLD vs. NXP Semiconductors NV | MYFAIR GOLD vs. Strategic Education |
| Sterling Construction vs. Larsen Toubro Limited | Sterling Construction vs. Superior Plus Corp | Sterling Construction vs. NMI Holdings | Sterling Construction vs. Origin Agritech |
Check out your portfolio center.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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