Correlation Between Sego Resources and Bird Construction

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

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

Diversification Opportunities for Sego Resources and Bird Construction

0.23

Correlation Coefficient

Sego Resources  Bird Construction

Modest diversification

The 3 months correlation between Sego and Bird is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sego Resources and Bird Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bird Construction and Sego Resources 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 Sego Resources are associated (or correlated) with Bird Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bird Construction has no effect on the direction of Sego Resources i.e., Sego Resources and Bird Construction go up and down completely randomly.

Pair Corralation between Sego Resources and Bird Construction

Assuming the 90 days horizon Sego Resources is expected to generate 4.59 times more return on investment than Bird Construction. However, Sego Resources is 4.59 times more volatile than Bird Construction. It trades about 0.06 of its potential returns per unit of risk. Bird Construction is currently generating about 0.02 per unit of risk. If you would invest  2.00  in Sego Resources on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Sego Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Sego Resources  vs.  Bird Construction

Sego Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sego Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sego Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Bird Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bird Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sego Resources and Bird Construction

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

The idea behind Sego Resources and Bird Construction 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.