Correlation Between Sterling Construction and PT Charoen
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and PT Charoen 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 Construction and PT Charoen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and PT Charoen Pokphand, you can compare the effects of market volatilities on Sterling Construction and PT Charoen 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 Construction with a short position of PT Charoen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and PT Charoen.
Diversification Opportunities for Sterling Construction and PT Charoen
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sterling and 0CP1 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and PT Charoen Pokphand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Charoen Pokphand and Sterling Construction 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 Construction are associated (or correlated) with PT Charoen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Charoen Pokphand has no effect on the direction of Sterling Construction i.e., Sterling Construction and PT Charoen go up and down completely randomly.
Pair Corralation between Sterling Construction and PT Charoen
Assuming the 90 days horizon Sterling Construction is expected to under-perform the PT Charoen. In addition to that, Sterling Construction is 1.49 times more volatile than PT Charoen Pokphand. It trades about -0.11 of its total potential returns per unit of risk. PT Charoen Pokphand is currently generating about -0.07 per unit of volatility. If you would invest 28.00 in PT Charoen Pokphand on October 14, 2024 and sell it today you would lose (1.00) from holding PT Charoen Pokphand or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. PT Charoen Pokphand
Performance |
| Timeline |
| Sterling Construction |
| PT Charoen Pokphand |
Sterling Construction and PT Charoen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and PT Charoen
The main advantage of trading using opposite Sterling Construction and PT Charoen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, PT Charoen 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 PT Charoen will offset losses from the drop in PT Charoen's long position.| Sterling Construction vs. PEPTONIC MEDICAL | Sterling Construction vs. AEON STORES | Sterling Construction vs. Caseys General Stores | Sterling Construction vs. Costco Wholesale Corp |
| PT Charoen vs. Columbia Sportswear | PT Charoen vs. COLUMBIA SPORTSWEAR | PT Charoen vs. ZINC MEDIA GR | PT Charoen vs. PENN Entertainment |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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