Correlation Between Sterling Construction and Api Group

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

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

Diversification Opportunities for Sterling Construction and Api Group

-0.11

Correlation Coefficient

Sterling Construction  Api Group

Good diversification

The 3 months correlation between Sterling and Api is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and Api Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Api Group Corp and Sterling Construction 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 Construction are associated (or correlated) with Api Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Api Group Corp has no effect on the direction of Sterling Construction i.e., Sterling Construction and Api Group go up and down completely randomly.

Pair Corralation between Sterling Construction and Api Group

Given the investment horizon of 90 days Sterling Construction is expected to under-perform the Api Group. In addition to that, Sterling Construction is 2.43 times more volatile than Api Group Corp. It trades about -0.1 of its total potential returns per unit of risk. Api Group Corp is currently generating about 0.03 per unit of volatility. If you would invest  3,602  in Api Group Corp on December 28, 2024 and sell it today you would earn a total of  68.00  from holding Api Group Corp or generate 1.89% return on investment over 90 days.

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

Sterling Construction  vs.  Api Group Corp

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 unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Api Group Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Api Group Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Api Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sterling Construction and Api Group

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

The idea behind Sterling Construction and Api Group 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.