Correlation Between Stericycle and OriginClear

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

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

Diversification Opportunities for Stericycle and OriginClear

-0.73

Correlation Coefficient

Stericycle  OriginClear

Pay attention - limited upside

The 3 months correlation between Stericycle and OriginClear is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Stericycle and OriginClear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OriginClear and Stericycle 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 Stericycle are associated (or correlated) with OriginClear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OriginClear has no effect on the direction of Stericycle i.e., Stericycle and OriginClear go up and down completely randomly.

Pair Corralation between Stericycle and OriginClear

Given the investment horizon of 90 days Stericycle is expected to generate 0.02 times more return on investment than OriginClear. However, Stericycle is 46.36 times less risky than OriginClear. It trades about -0.58 of its potential returns per unit of risk. OriginClear is currently generating about -0.08 per unit of risk. If you would invest  7,890  in Stericycle on October 9, 2024 and sell it today you would lose (40.00) from holding Stericycle or give up 0.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	7.5%
Values	Daily Returns

Stericycle  vs.  OriginClear

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.

OriginClear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OriginClear has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential 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 Stericycle and OriginClear

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

The idea behind Stericycle and OriginClear 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.