Correlation Between SG Blocks and Carpenter Technology

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

By analyzing existing cross correlation between SG Blocks and Carpenter Technology, you can compare the effects of market volatilities on SG Blocks and Carpenter Technology 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 SG Blocks with a short position of Carpenter Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SG Blocks and Carpenter Technology.

Diversification Opportunities for SG Blocks and Carpenter Technology

-0.71

Correlation Coefficient

SG Blocks  Carpenter Technology

Pay attention - limited upside

The 3 months correlation between SGBX and Carpenter is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SG Blocks and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology and SG Blocks 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 SG Blocks are associated (or correlated) with Carpenter Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carpenter Technology has no effect on the direction of SG Blocks i.e., SG Blocks and Carpenter Technology go up and down completely randomly.

Pair Corralation between SG Blocks and Carpenter Technology

Given the investment horizon of 90 days SG Blocks is expected to under-perform the Carpenter Technology. In addition to that, SG Blocks is 2.67 times more volatile than Carpenter Technology. It trades about -0.21 of its total potential returns per unit of risk. Carpenter Technology is currently generating about 0.18 per unit of volatility. If you would invest  14,459  in Carpenter Technology on August 30, 2024 and sell it today you would earn a total of  4,987  from holding Carpenter Technology or generate 34.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

SG Blocks  vs.  Carpenter Technology

SG Blocks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SG Blocks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Carpenter Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carpenter Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Carpenter Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SG Blocks and Carpenter Technology

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

The idea behind SG Blocks and Carpenter Technology 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.