Correlation Between Sterling Construction and PKSHA TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and PKSHA TECHNOLOGY INC, you can compare the effects of market volatilities on Sterling Construction and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and PKSHA TECHNOLOGY.
Diversification Opportunities for Sterling Construction and PKSHA TECHNOLOGY
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sterling and PKSHA is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and PKSHA TECHNOLOGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKSHA TECHNOLOGY INC 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 PKSHA TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKSHA TECHNOLOGY INC has no effect on the direction of Sterling Construction i.e., Sterling Construction and PKSHA TECHNOLOGY go up and down completely randomly.
Pair Corralation between Sterling Construction and PKSHA TECHNOLOGY
Assuming the 90 days horizon Sterling Construction is expected to generate 0.88 times more return on investment than PKSHA TECHNOLOGY. However, Sterling Construction is 1.13 times less risky than PKSHA TECHNOLOGY. It trades about 0.09 of its potential returns per unit of risk. PKSHA TECHNOLOGY INC is currently generating about 0.05 per unit of risk. If you would invest 3,560 in Sterling Construction on December 4, 2024 and sell it today you would earn a total of 7,905 from holding Sterling Construction or generate 222.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. PKSHA TECHNOLOGY INC
Performance |
| Timeline |
| Sterling Construction |
| PKSHA TECHNOLOGY INC |
Sterling Construction and PKSHA TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and PKSHA TECHNOLOGY
The main advantage of trading using opposite Sterling Construction and PKSHA TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY will offset losses from the drop in PKSHA TECHNOLOGY's long position.| Sterling Construction vs. NTT DATA | Sterling Construction vs. SALESFORCE INC CDR | Sterling Construction vs. SIDETRADE EO 1 | Sterling Construction vs. Tradegate AG Wertpapierhandelsbank |
| PKSHA TECHNOLOGY vs. SENECA FOODS A | PKSHA TECHNOLOGY vs. Nomad Foods | PKSHA TECHNOLOGY vs. Jacquet Metal Service | PKSHA TECHNOLOGY vs. Zijin Mining 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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