Correlation Between Sterling Construction and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and AIR PRODCHEMICALS, you can compare the effects of market volatilities on Sterling Construction and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and AIR PRODCHEMICALS.
Diversification Opportunities for Sterling Construction and AIR PRODCHEMICALS
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sterling and AIR is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of Sterling Construction i.e., Sterling Construction and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between Sterling Construction and AIR PRODCHEMICALS
Assuming the 90 days horizon Sterling Construction is expected to under-perform the AIR PRODCHEMICALS. In addition to that, Sterling Construction is 3.94 times more volatile than AIR PRODCHEMICALS. It trades about -0.29 of its total potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about -0.14 per unit of volatility. If you would invest 31,230 in AIR PRODCHEMICALS on November 28, 2024 and sell it today you would lose (1,640) from holding AIR PRODCHEMICALS or give up 5.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. AIR PRODCHEMICALS
Performance |
| Timeline |
| Sterling Construction |
| AIR PRODCHEMICALS |
Sterling Construction and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and AIR PRODCHEMICALS
The main advantage of trading using opposite Sterling Construction and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| Sterling Construction vs. PARKEN SPORT ENT | Sterling Construction vs. Corporate Travel Management | Sterling Construction vs. Yuexiu Transport Infrastructure | Sterling Construction vs. CEOTRONICS |
| AIR PRODCHEMICALS vs. BII Railway Transportation | AIR PRODCHEMICALS vs. DICKS Sporting Goods | AIR PRODCHEMICALS vs. Meli Hotels International | AIR PRODCHEMICALS vs. MELIA HOTELS |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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