Correlation Between Sterling Check and Couchbase

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

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

Diversification Opportunities for Sterling Check and Couchbase

0.43

Correlation Coefficient

Sterling Check  Couchbase

Very weak diversification

The 3 months correlation between Sterling and Couchbase is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Check Corp and Couchbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Couchbase and Sterling Check 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 Check Corp are associated (or correlated) with Couchbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Couchbase has no effect on the direction of Sterling Check i.e., Sterling Check and Couchbase go up and down completely randomly.

Pair Corralation between Sterling Check and Couchbase

Given the investment horizon of 90 days Sterling Check is expected to generate 4.09 times less return on investment than Couchbase. But when comparing it to its historical volatility, Sterling Check Corp is 3.11 times less risky than Couchbase. It trades about 0.02 of its potential returns per unit of risk. Couchbase is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,529  in Couchbase on September 27, 2024 and sell it today you would earn a total of  21.00  from holding Couchbase or generate 1.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	39.68%
Values	Daily Returns

Sterling Check Corp  vs.  Couchbase

Sterling Check Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sterling Check Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Sterling Check is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Couchbase

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Couchbase are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Couchbase is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sterling Check and Couchbase

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

The idea behind Sterling Check Corp and Couchbase 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.