Correlation Between Stericycle and Susglobal Energy

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

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

Diversification Opportunities for Stericycle and Susglobal Energy

-0.6

Correlation Coefficient

Stericycle  Susglobal Energy

Excellent diversification

The 3 months correlation between Stericycle and Susglobal is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Stericycle and Susglobal Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Susglobal Energy Corp 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 Susglobal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Susglobal Energy Corp has no effect on the direction of Stericycle i.e., Stericycle and Susglobal Energy go up and down completely randomly.

Pair Corralation between Stericycle and Susglobal Energy

Given the investment horizon of 90 days Stericycle is expected to generate 3.21 times less return on investment than Susglobal Energy. But when comparing it to its historical volatility, Stericycle is 5.59 times less risky than Susglobal Energy. It trades about 0.05 of its potential returns per unit of risk. Susglobal Energy Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. 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

Stericycle  vs.  Susglobal Energy Corp

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.

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.

Pair Trading with Stericycle and Susglobal Energy

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

The idea behind Stericycle and Susglobal Energy Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.