Correlation Between Sterling Construction and ABO GROUP
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and ABO GROUP 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 ABO GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and ABO GROUP ENVIRONMENT, you can compare the effects of market volatilities on Sterling Construction and ABO GROUP 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 ABO GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and ABO GROUP.
Diversification Opportunities for Sterling Construction and ABO GROUP
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sterling and ABO is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and ABO GROUP ENVIRONMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABO GROUP ENVIRONMENT 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 ABO GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABO GROUP ENVIRONMENT has no effect on the direction of Sterling Construction i.e., Sterling Construction and ABO GROUP go up and down completely randomly.
Pair Corralation between Sterling Construction and ABO GROUP
Assuming the 90 days horizon Sterling Construction is expected to under-perform the ABO GROUP. In addition to that, Sterling Construction is 1.58 times more volatile than ABO GROUP ENVIRONMENT. It trades about -0.14 of its total potential returns per unit of risk. ABO GROUP ENVIRONMENT is currently generating about -0.14 per unit of volatility. If you would invest 505.00 in ABO GROUP ENVIRONMENT on September 20, 2024 and sell it today you would lose (23.00) from holding ABO GROUP ENVIRONMENT or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. ABO GROUP ENVIRONMENT
Performance |
| Timeline |
| Sterling Construction |
| ABO GROUP ENVIRONMENT |
Sterling Construction and ABO GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and ABO GROUP
The main advantage of trading using opposite Sterling Construction and ABO GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, ABO GROUP 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 ABO GROUP will offset losses from the drop in ABO GROUP's long position.| Sterling Construction vs. MELIA HOTELS | Sterling Construction vs. CDL INVESTMENT | Sterling Construction vs. Host Hotels Resorts | Sterling Construction vs. InterContinental Hotels Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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