Correlation Between Perma Fix and Stericycle

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

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

Diversification Opportunities for Perma Fix and Stericycle

-0.43

Correlation Coefficient

Perma Fix  Stericycle

Very good diversification

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

Pair Corralation between Perma Fix and Stericycle

Given the investment horizon of 90 days Perma Fix Environmental Svcs is expected to generate 1.92 times more return on investment than Stericycle. However, Perma Fix is 1.92 times more volatile than Stericycle. It trades about 0.07 of its potential returns per unit of risk. Stericycle is currently generating about 0.05 per unit of risk. If you would invest  366.00  in Perma Fix Environmental Svcs on September 21, 2024 and sell it today you would earn a total of  688.00  from holding Perma Fix Environmental Svcs or generate 187.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.75%
Values	Daily Returns

Perma Fix Environmental Svcs  vs.  Stericycle

Perma Fix Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perma Fix Environmental Svcs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Perma Fix is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Stericycle

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Stericycle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite inconsistent fundamental indicators, Stericycle disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perma Fix and Stericycle

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

The idea behind Perma Fix Environmental Svcs and Stericycle 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.