Correlation Between AIR PRODCHEMICALS and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS 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 AIR PRODCHEMICALS and Sterling Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Sterling Construction, you can compare the effects of market volatilities on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS with a short position of Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Sterling Construction.
Diversification Opportunities for AIR PRODCHEMICALS and Sterling Construction
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between AIR and Sterling is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Sterling Construction go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Sterling Construction
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.25 times more return on investment than Sterling Construction. However, AIR PRODCHEMICALS is 3.94 times less risky than Sterling Construction. It trades about -0.14 of its potential returns per unit of risk. Sterling Construction is currently generating about -0.29 per unit of risk. If you would invest 31,230 in AIR PRODCHEMICALS on November 28, 2024 and sell it today you would lose (1,640) from holding AIR PRODCHEMICALS or give up 5.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Sterling Construction
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Sterling Construction |
AIR PRODCHEMICALS and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Sterling Construction
The main advantage of trading using opposite AIR PRODCHEMICALS and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS 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.| AIR PRODCHEMICALS vs. BII Railway Transportation | AIR PRODCHEMICALS vs. DICKS Sporting Goods | AIR PRODCHEMICALS vs. Meli Hotels International | AIR PRODCHEMICALS vs. MELIA HOTELS |
| Sterling Construction vs. PARKEN SPORT ENT | Sterling Construction vs. Corporate Travel Management | Sterling Construction vs. Yuexiu Transport Infrastructure | Sterling Construction vs. CEOTRONICS |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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