Correlation Between Susglobal Energy and Stericycle

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

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

Diversification Opportunities for Susglobal Energy and Stericycle

-0.6

Correlation Coefficient

Susglobal Energy  Stericycle

Excellent diversification

The 3 months correlation between Susglobal and Stericycle is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Susglobal Energy Corp and Stericycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stericycle and Susglobal Energy 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 Susglobal Energy Corp 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 Susglobal Energy i.e., Susglobal Energy and Stericycle go up and down completely randomly.

Pair Corralation between Susglobal Energy and Stericycle

Given the investment horizon of 90 days Susglobal Energy Corp is expected to generate 5.59 times more return on investment than Stericycle. However, Susglobal Energy is 5.59 times more volatile than Stericycle. It trades about 0.03 of its potential returns per unit of risk. Stericycle is currently generating about 0.05 per unit of risk. If you would invest  14.00  in Susglobal Energy Corp on September 21, 2024 and sell it today you would lose (12.15) from holding Susglobal Energy Corp or give up 86.79% of portfolio value over 90 days.

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

Susglobal Energy Corp  vs.  Stericycle

Susglobal Energy Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Susglobal Energy Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Susglobal Energy reported solid returns over the last few months and may actually be approaching a breakup point.

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 Susglobal Energy and Stericycle

The main advantage of trading using opposite Susglobal Energy and Stericycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Susglobal Energy 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 Susglobal Energy Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.