Correlation Between Sterling Construction and UET United
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and UET United 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 UET United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and UET United Electronic, you can compare the effects of market volatilities on Sterling Construction and UET United 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 UET United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and UET United.
Diversification Opportunities for Sterling Construction and UET United
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sterling and UET is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and UET United Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UET United Electronic 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 UET United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UET United Electronic has no effect on the direction of Sterling Construction i.e., Sterling Construction and UET United go up and down completely randomly.
Pair Corralation between Sterling Construction and UET United
Assuming the 90 days horizon Sterling Construction is expected to generate 0.69 times more return on investment than UET United. However, Sterling Construction is 1.44 times less risky than UET United. It trades about 0.13 of its potential returns per unit of risk. UET United Electronic is currently generating about 0.04 per unit of risk. If you would invest 3,060 in Sterling Construction on August 28, 2024 and sell it today you would earn a total of 15,695 from holding Sterling Construction or generate 512.91% 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. UET United Electronic
Performance |
| Timeline |
| Sterling Construction |
| UET United Electronic |
Sterling Construction and UET United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and UET United
The main advantage of trading using opposite Sterling Construction and UET United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, UET United 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 UET United will offset losses from the drop in UET United's long position.| Sterling Construction vs. Seven West Media | Sterling Construction vs. ZINC MEDIA GR | Sterling Construction vs. AWILCO DRILLING PLC | Sterling Construction vs. ATRESMEDIA |
| UET United vs. Cisco Systems | UET United vs. Telefonaktiebolaget LM Ericsson | UET United vs. Superior Plus Corp | UET United vs. NMI Holdings |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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