Correlation Between Sterling Construction and Continental Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and Continental Aktiengesellscha 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 Continental Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and Continental Aktiengesellschaft, you can compare the effects of market volatilities on Sterling Construction and Continental Aktiengesellscha 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 Continental Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and Continental Aktiengesellscha.
Diversification Opportunities for Sterling Construction and Continental Aktiengesellscha
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sterling and Continental is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha 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 Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of Sterling Construction i.e., Sterling Construction and Continental Aktiengesellscha go up and down completely randomly.
Pair Corralation between Sterling Construction and Continental Aktiengesellscha
Assuming the 90 days horizon Sterling Construction is expected to generate 1.48 times more return on investment than Continental Aktiengesellscha. However, Sterling Construction is 1.48 times more volatile than Continental Aktiengesellschaft. It trades about 0.3 of its potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about 0.15 per unit of risk. If you would invest 13,880 in Sterling Construction on September 4, 2024 and sell it today you would earn a total of 4,430 from holding Sterling Construction or generate 31.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sterling Construction vs. Continental Aktiengesellschaft
Performance |
| Timeline |
| Sterling Construction |
| Continental Aktiengesellscha |
Sterling Construction and Continental Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and Continental Aktiengesellscha
The main advantage of trading using opposite Sterling Construction and Continental Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, Continental Aktiengesellscha 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 Continental Aktiengesellscha will offset losses from the drop in Continental Aktiengesellscha's long position.| Sterling Construction vs. Larsen Toubro Limited | Sterling Construction vs. China Railway Group | Sterling Construction vs. China Communications Construction | Sterling Construction vs. Superior Plus Corp |
| Continental Aktiengesellscha vs. Dno ASA | Continental Aktiengesellscha vs. PT Astra International | Continental Aktiengesellscha vs. Superior Plus Corp | Continental Aktiengesellscha 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 Stocks Directory module to find actively traded stocks across global markets.
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