Correlation Between Concepcion Industrial and STI Education

Can any of the company-specific risk be diversified away by investing in both Concepcion Industrial and STI Education 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 Concepcion Industrial and STI Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Concepcion Industrial Corp and STI Education Systems, you can compare the effects of market volatilities on Concepcion Industrial and STI Education 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 Concepcion Industrial with a short position of STI Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concepcion Industrial and STI Education.

Diversification Opportunities for Concepcion Industrial and STI Education

0.07

Correlation Coefficient

Concepcion Industrial  STI Education

Significant diversification

The 3 months correlation between Concepcion and STI is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Concepcion Industrial Corp and STI Education Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STI Education Systems and Concepcion Industrial 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 Concepcion Industrial Corp are associated (or correlated) with STI Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STI Education Systems has no effect on the direction of Concepcion Industrial i.e., Concepcion Industrial and STI Education go up and down completely randomly.

Pair Corralation between Concepcion Industrial and STI Education

Assuming the 90 days trading horizon Concepcion Industrial Corp is expected to under-perform the STI Education. But the stock apears to be less risky and, when comparing its historical volatility, Concepcion Industrial Corp is 2.07 times less risky than STI Education. The stock trades about -0.04 of its potential returns per unit of risk. The STI Education Systems is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  115.00  in STI Education Systems on September 18, 2024 and sell it today you would earn a total of  17.00  from holding STI Education Systems or generate 14.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Concepcion Industrial Corp  vs.  STI Education Systems

Concepcion Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concepcion Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Concepcion Industrial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

STI Education Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STI Education Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, STI Education exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Concepcion Industrial and STI Education

The main advantage of trading using opposite Concepcion Industrial and STI Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Concepcion Industrial position performs unexpectedly, STI Education 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 STI Education will offset losses from the drop in STI Education's long position.

The idea behind Concepcion Industrial Corp and STI Education Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.