Correlation Between Sterling Metals and Progressive Planet

Can any of the company-specific risk be diversified away by investing in both Sterling Metals and Progressive Planet 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 Metals and Progressive Planet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sterling Metals Corp and Progressive Planet Solutions, you can compare the effects of market volatilities on Sterling Metals and Progressive Planet 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 Metals with a short position of Progressive Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Metals and Progressive Planet.

Diversification Opportunities for Sterling Metals and Progressive Planet

-0.58

Correlation Coefficient

Sterling Metals  Progressive Planet

Excellent diversification

The 3 months correlation between Sterling and Progressive is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Metals Corp and Progressive Planet Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Planet and Sterling Metals 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 Metals Corp are associated (or correlated) with Progressive Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive Planet has no effect on the direction of Sterling Metals i.e., Sterling Metals and Progressive Planet go up and down completely randomly.

Pair Corralation between Sterling Metals and Progressive Planet

Assuming the 90 days horizon Sterling Metals Corp is expected to under-perform the Progressive Planet. In addition to that, Sterling Metals is 1.52 times more volatile than Progressive Planet Solutions. It trades about -0.04 of its total potential returns per unit of risk. Progressive Planet Solutions is currently generating about 0.17 per unit of volatility. If you would invest  7.30  in Progressive Planet Solutions on August 31, 2024 and sell it today you would earn a total of  5.70  from holding Progressive Planet Solutions or generate 78.08% return on investment over 90 days.

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

Sterling Metals Corp  vs.  Progressive Planet Solutions

Sterling Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Progressive Planet

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Planet Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Progressive Planet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sterling Metals and Progressive Planet

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

The idea behind Sterling Metals Corp and Progressive Planet Solutions 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.