Correlation Between Sterling Construction and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and GEELY AUTOMOBILE, you can compare the effects of market volatilities on Sterling Construction and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and GEELY AUTOMOBILE.
Diversification Opportunities for Sterling Construction and GEELY AUTOMOBILE
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sterling and GEELY is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of Sterling Construction i.e., Sterling Construction and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between Sterling Construction and GEELY AUTOMOBILE
Assuming the 90 days horizon Sterling Construction is expected to generate 1.23 times more return on investment than GEELY AUTOMOBILE. However, Sterling Construction is 1.23 times more volatile than GEELY AUTOMOBILE. It trades about 0.09 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about 0.08 per unit of risk. If you would invest 3,860 in Sterling Construction on November 21, 2024 and sell it today you would earn a total of 8,665 from holding Sterling Construction or generate 224.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| Sterling Construction |
| GEELY AUTOMOBILE |
Sterling Construction and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and GEELY AUTOMOBILE
The main advantage of trading using opposite Sterling Construction and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE's long position.| Sterling Construction vs. MAGNUM MINING EXP | Sterling Construction vs. Zijin Mining Group | Sterling Construction vs. United States Steel | Sterling Construction vs. COSMOSTEEL HLDGS |
| GEELY AUTOMOBILE vs. GBS Software AG | GEELY AUTOMOBILE vs. Nufarm Limited | GEELY AUTOMOBILE vs. DAIRY FARM INTL | GEELY AUTOMOBILE vs. MAGIC SOFTWARE ENTR |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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