Correlation Between SECURE ELECTRONIC and STERLING FINANCIAL

Can any of the company-specific risk be diversified away by investing in both SECURE ELECTRONIC and STERLING FINANCIAL 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 SECURE ELECTRONIC and STERLING FINANCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SECURE ELECTRONIC TECHNOLOGY and STERLING FINANCIAL HOLDINGS, you can compare the effects of market volatilities on SECURE ELECTRONIC and STERLING FINANCIAL 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 SECURE ELECTRONIC with a short position of STERLING FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SECURE ELECTRONIC and STERLING FINANCIAL.

Diversification Opportunities for SECURE ELECTRONIC and STERLING FINANCIAL

-0.48

Correlation Coefficient

SECURE ELECTRONIC  STERLING FINANCIAL

Very good diversification

The 3 months correlation between SECURE and STERLING is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SECURE ELECTRONIC TECHNOLOGY and STERLING FINANCIAL HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STERLING FINANCIAL and SECURE ELECTRONIC 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 SECURE ELECTRONIC TECHNOLOGY are associated (or correlated) with STERLING FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STERLING FINANCIAL has no effect on the direction of SECURE ELECTRONIC i.e., SECURE ELECTRONIC and STERLING FINANCIAL go up and down completely randomly.

Pair Corralation between SECURE ELECTRONIC and STERLING FINANCIAL

Assuming the 90 days trading horizon SECURE ELECTRONIC TECHNOLOGY is expected to under-perform the STERLING FINANCIAL. In addition to that, SECURE ELECTRONIC is 1.38 times more volatile than STERLING FINANCIAL HOLDINGS. It trades about -0.04 of its total potential returns per unit of risk. STERLING FINANCIAL HOLDINGS is currently generating about 0.1 per unit of volatility. If you would invest  400.00  in STERLING FINANCIAL HOLDINGS on September 12, 2024 and sell it today you would earn a total of  77.00  from holding STERLING FINANCIAL HOLDINGS or generate 19.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SECURE ELECTRONIC TECHNOLOGY  vs.  STERLING FINANCIAL HOLDINGS

SECURE ELECTRONIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SECURE ELECTRONIC TECHNOLOGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

STERLING FINANCIAL

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STERLING FINANCIAL HOLDINGS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, STERLING FINANCIAL displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SECURE ELECTRONIC and STERLING FINANCIAL

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

The idea behind SECURE ELECTRONIC TECHNOLOGY and STERLING FINANCIAL HOLDINGS 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..