Correlation Between Ecolab and SD Standard

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

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

Diversification Opportunities for Ecolab and SD Standard

0.0

Correlation Coefficient

Ecolab  SD Standard

Pay attention - limited upside

The 3 months correlation between Ecolab and SDSDF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and SD Standard Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SD Standard Drilling and Ecolab 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 Ecolab Inc are associated (or correlated) with SD Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SD Standard Drilling has no effect on the direction of Ecolab i.e., Ecolab and SD Standard go up and down completely randomly.

Pair Corralation between Ecolab and SD Standard

If you would invest  26,890  in Ecolab Inc on May 9, 2025 and sell it today you would lose (11.00) from holding Ecolab Inc or give up 0.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ecolab Inc  vs.  SD Standard Drilling

Ecolab Inc

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ecolab Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Ecolab may actually be approaching a critical reversion point that can send shares even higher in September 2025.

SD Standard Drilling

Risk-Adjusted Performance

Weakest

Over the last 90 days SD Standard Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, SD Standard is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ecolab and SD Standard

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

The idea behind Ecolab Inc and SD Standard Drilling 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.