Correlation Between STI Education and Concepcion Industrial

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

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

Diversification Opportunities for STI Education and Concepcion Industrial

0.07

Correlation Coefficient

STI Education  Concepcion Industrial

Significant diversification

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

Pair Corralation between STI Education and Concepcion Industrial

Assuming the 90 days trading horizon STI Education Systems is expected to generate 1.26 times more return on investment than Concepcion Industrial. However, STI Education is 1.26 times more volatile than Concepcion Industrial Corp. It trades about 0.18 of its potential returns per unit of risk. Concepcion Industrial Corp is currently generating about -0.02 per unit of risk. If you would invest  122.00  in STI Education Systems on September 18, 2024 and sell it today you would earn a total of  10.00  from holding STI Education Systems or generate 8.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

STI Education Systems  vs.  Concepcion Industrial Corp

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.

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.

Pair Trading with STI Education and Concepcion Industrial

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

The idea behind STI Education Systems and Concepcion Industrial Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.