Correlation Between Sterling Metals and Monarch Cement
Can any of the company-specific risk be diversified away by investing in both Sterling Metals and Monarch Cement 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 Sterling Metals and Monarch Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Metals Corp and The Monarch Cement, you can compare the effects of market volatilities on Sterling Metals and Monarch Cement 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 Sterling Metals with a short position of Monarch Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Metals and Monarch Cement.
Diversification Opportunities for Sterling Metals and Monarch Cement
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sterling and Monarch is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Metals Corp and The Monarch Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarch Cement and Sterling Metals 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 Sterling Metals Corp are associated (or correlated) with Monarch Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarch Cement has no effect on the direction of Sterling Metals i.e., Sterling Metals and Monarch Cement go up and down completely randomly.
Pair Corralation between Sterling Metals and Monarch Cement
Assuming the 90 days horizon Sterling Metals Corp is expected to under-perform the Monarch Cement. In addition to that, Sterling Metals is 2.05 times more volatile than The Monarch Cement. It trades about -0.24 of its total potential returns per unit of risk. The Monarch Cement is currently generating about 0.2 per unit of volatility. If you would invest 19,400 in The Monarch Cement on August 26, 2024 and sell it today you would earn a total of 2,450 from holding The Monarch Cement or generate 12.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Metals Corp vs. The Monarch Cement
Performance |
| Timeline |
| Sterling Metals Corp |
| Monarch Cement |
Sterling Metals and Monarch Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Metals and Monarch Cement
The main advantage of trading using opposite Sterling Metals and Monarch Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Metals position performs unexpectedly, Monarch Cement 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 Monarch Cement will offset losses from the drop in Monarch Cement's long position.| Sterling Metals vs. Progressive Planet Solutions | Sterling Metals vs. Durango Resources | Sterling Metals vs. Avarone Metals | Sterling Metals vs. Mundoro Capital |
| Monarch Cement vs. Ascendant Resources | Monarch Cement vs. Cantex Mine Development | Monarch Cement vs. Amarc Resources | Monarch Cement vs. Sterling Metals Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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