Correlation Between Sterling Construction and AOI Electronics
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and AOI Electronics 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 Construction and AOI Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and AOI Electronics Co, you can compare the effects of market volatilities on Sterling Construction and AOI Electronics 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 Construction with a short position of AOI Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and AOI Electronics.
Diversification Opportunities for Sterling Construction and AOI Electronics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sterling and AOI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and AOI Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOI Electronics and Sterling Construction 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 Construction are associated (or correlated) with AOI Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOI Electronics has no effect on the direction of Sterling Construction i.e., Sterling Construction and AOI Electronics go up and down completely randomly.
Pair Corralation between Sterling Construction and AOI Electronics
If you would invest 11,030 in Sterling Construction on September 25, 2024 and sell it today you would earn a total of 5,880 from holding Sterling Construction or generate 53.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sterling Construction vs. AOI Electronics Co
Performance |
Timeline |
Sterling Construction |
AOI Electronics |
Sterling Construction and AOI Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sterling Construction and AOI Electronics
The main advantage of trading using opposite Sterling Construction and AOI Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, AOI Electronics 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 AOI Electronics will offset losses from the drop in AOI Electronics' long position.Sterling Construction vs. Vinci S A | Sterling Construction vs. Johnson Controls International | Sterling Construction vs. Larsen Toubro Limited | Sterling Construction vs. China Railway Group |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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