Correlation Between SD Standard and Bergen Carbon

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

By analyzing existing cross correlation between SD Standard Drilling and Bergen Carbon Solutions, you can compare the effects of market volatilities on SD Standard and Bergen Carbon 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 SD Standard with a short position of Bergen Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of SD Standard and Bergen Carbon.

Diversification Opportunities for SD Standard and Bergen Carbon

-0.67

Correlation Coefficient

SD Standard  Bergen Carbon

Excellent diversification

The 3 months correlation between SDSD and Bergen is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SD Standard Drilling and Bergen Carbon Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergen Carbon Solutions and SD Standard 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 SD Standard Drilling are associated (or correlated) with Bergen Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergen Carbon Solutions has no effect on the direction of SD Standard i.e., SD Standard and Bergen Carbon go up and down completely randomly.

Pair Corralation between SD Standard and Bergen Carbon

Assuming the 90 days trading horizon SD Standard Drilling is expected to generate 0.26 times more return on investment than Bergen Carbon. However, SD Standard Drilling is 3.8 times less risky than Bergen Carbon. It trades about 0.0 of its potential returns per unit of risk. Bergen Carbon Solutions is currently generating about -0.02 per unit of risk. If you would invest  181.00  in SD Standard Drilling on October 11, 2024 and sell it today you would lose (10.00) from holding SD Standard Drilling or give up 5.52% of portfolio value over 90 days.

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

SD Standard Drilling  vs.  Bergen Carbon Solutions

SD Standard Drilling

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SD Standard Drilling are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, SD Standard is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bergen Carbon Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bergen Carbon Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with SD Standard and Bergen Carbon

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

The idea behind SD Standard Drilling and Bergen Carbon Solutions 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 CEOs Directory module to screen CEOs from public companies around the world.