Correlation Between UET United and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both UET United 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 UET United and Sterling Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UET United Electronic and Sterling Construction, you can compare the effects of market volatilities on UET United 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 UET United with a short position of Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and Sterling Construction.
Diversification Opportunities for UET United and Sterling Construction
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UET and Sterling is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction and UET United 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 UET United Electronic 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 UET United i.e., UET United and Sterling Construction go up and down completely randomly.
Pair Corralation between UET United and Sterling Construction
Assuming the 90 days trading horizon UET United is expected to generate 9.94 times less return on investment than Sterling Construction. In addition to that, UET United is 1.23 times more volatile than Sterling Construction. It trades about 0.01 of its total potential returns per unit of risk. Sterling Construction is currently generating about 0.12 per unit of volatility. If you would invest 5,350 in Sterling Construction on August 28, 2024 and sell it today you would earn a total of 13,405 from holding Sterling Construction or generate 250.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
UET United Electronic vs. Sterling Construction
Performance |
| Timeline |
| UET United Electronic |
| Sterling Construction |
UET United and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UET United and Sterling Construction
The main advantage of trading using opposite UET United and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UET United 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.| UET United vs. Cisco Systems | UET United vs. Telefonaktiebolaget LM Ericsson | UET United vs. Superior Plus Corp | UET United vs. NMI Holdings |
| Sterling Construction vs. Seven West Media | Sterling Construction vs. ZINC MEDIA GR | Sterling Construction vs. AWILCO DRILLING PLC | Sterling Construction vs. ATRESMEDIA |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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