Correlation Between Sterling Check and MicroAlgo

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

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

Diversification Opportunities for Sterling Check and MicroAlgo

-0.59

Correlation Coefficient

Sterling Check  MicroAlgo

Excellent diversification

The 3 months correlation between Sterling and MicroAlgo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Check Corp and MicroAlgo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroAlgo and Sterling Check 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 Sterling Check Corp are associated (or correlated) with MicroAlgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroAlgo has no effect on the direction of Sterling Check i.e., Sterling Check and MicroAlgo go up and down completely randomly.

Pair Corralation between Sterling Check and MicroAlgo

Given the investment horizon of 90 days Sterling Check Corp is expected to generate 0.1 times more return on investment than MicroAlgo. However, Sterling Check Corp is 10.06 times less risky than MicroAlgo. It trades about 0.08 of its potential returns per unit of risk. MicroAlgo is currently generating about -0.06 per unit of risk. If you would invest  1,619  in Sterling Check Corp on August 30, 2024 and sell it today you would earn a total of  55.00  from holding Sterling Check Corp or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	69.84%
Values	Daily Returns

Sterling Check Corp  vs.  MicroAlgo

Sterling Check Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Sterling Check Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Sterling Check is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

MicroAlgo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MicroAlgo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sterling Check and MicroAlgo

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

The idea behind Sterling Check Corp and MicroAlgo 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.