Correlation Between Sandston Corp and LB Foster

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Can any of the company-specific risk be diversified away by investing in both Sandston Corp and LB Foster 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 Sandston Corp and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandston Corp and LB Foster, you can compare the effects of market volatilities on Sandston Corp and LB Foster 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 Sandston Corp with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandston Corp and LB Foster.

Diversification Opportunities for Sandston Corp and LB Foster

-0.84
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Sandston and FSTR is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sandston Corp and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Sandston Corp 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 Sandston Corp are associated (or correlated) with LB Foster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Foster has no effect on the direction of Sandston Corp i.e., Sandston Corp and LB Foster go up and down completely randomly.

Pair Corralation between Sandston Corp and LB Foster

If you would invest  2,416  in LB Foster on September 12, 2024 and sell it today you would earn a total of  491.00  from holding LB Foster or generate 20.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy4.55%
ValuesDaily Returns

Sandston Corp  vs.  LB Foster

 Performance 
       Timeline  
Sandston Corp 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in LB Foster are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, LB Foster reported solid returns over the last few months and may actually be approaching a breakup point.

Sandston Corp and LB Foster Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sandston Corp and LB Foster

The main advantage of trading using opposite Sandston Corp and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandston Corp position performs unexpectedly, LB Foster 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 LB Foster will offset losses from the drop in LB Foster's long position.
The idea behind Sandston Corp and LB Foster 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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