Correlation Between Sterling Capital and Guinness Atkinson

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

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

Diversification Opportunities for Sterling Capital and Guinness Atkinson

0.28

Correlation Coefficient

Sterling Capital  Guinness Atkinson

Modest diversification

The 3 months correlation between Sterling and Guinness is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Focus and Guinness Atkinson Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Asset and Sterling Capital 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 Capital Focus are associated (or correlated) with Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Asset has no effect on the direction of Sterling Capital i.e., Sterling Capital and Guinness Atkinson go up and down completely randomly.

Pair Corralation between Sterling Capital and Guinness Atkinson

Considering the 90-day investment horizon Sterling Capital is expected to generate 1.0 times less return on investment than Guinness Atkinson. In addition to that, Sterling Capital is 2.53 times more volatile than Guinness Atkinson Asset. It trades about 0.13 of its total potential returns per unit of risk. Guinness Atkinson Asset is currently generating about 0.33 per unit of volatility. If you would invest  1,516  in Guinness Atkinson Asset on October 23, 2024 and sell it today you would earn a total of  22.00  from holding Guinness Atkinson Asset or generate 1.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	15.0%
Values	Daily Returns

Sterling Capital Focus  vs.  Guinness Atkinson Asset

Sterling Capital Focus

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Focus are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Sterling Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Guinness Atkinson Asset

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Guinness Atkinson Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unfluctuating basic indicators, Guinness Atkinson may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sterling Capital and Guinness Atkinson

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

The idea behind Sterling Capital Focus and Guinness Atkinson Asset 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.