Correlation Between Vinci S and Sterling Construction

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

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

Diversification Opportunities for Vinci S and Sterling Construction

-0.74

Correlation Coefficient

Vinci S  Sterling Construction

Pay attention - limited upside

The 3 months correlation between Vinci and Sterling is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vinci S A and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction and Vinci S 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 Vinci S A are associated (or correlated) with Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of Vinci S i.e., Vinci S and Sterling Construction go up and down completely randomly.

Pair Corralation between Vinci S and Sterling Construction

Assuming the 90 days horizon Vinci S A is expected to generate 0.26 times more return on investment than Sterling Construction. However, Vinci S A is 3.84 times less risky than Sterling Construction. It trades about 0.22 of its potential returns per unit of risk. Sterling Construction is currently generating about -0.11 per unit of risk. If you would invest  9,948  in Vinci S A on December 30, 2024 and sell it today you would earn a total of  1,932  from holding Vinci S A or generate 19.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Vinci S A  vs.  Sterling Construction

Vinci S A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vinci S A are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vinci S reported solid returns over the last few months and may actually be approaching a breakup point.

Sterling Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sterling Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Vinci S and Sterling Construction

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

The idea behind Vinci S A and Sterling Construction 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.