Correlation Between Sterling Construction and Agricultural Bank

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

By analyzing existing cross correlation between Sterling Construction and Agricultural Bank of, you can compare the effects of market volatilities on Sterling Construction and Agricultural Bank 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 Agricultural Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and Agricultural Bank.

Diversification Opportunities for Sterling Construction and Agricultural Bank

-0.67

Correlation Coefficient

Sterling Construction  Agricultural Bank

Excellent diversification

The 3 months correlation between Sterling and Agricultural is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and Agricultural Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank 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 Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of Sterling Construction i.e., Sterling Construction and Agricultural Bank go up and down completely randomly.

Pair Corralation between Sterling Construction and Agricultural Bank

Assuming the 90 days horizon Sterling Construction is expected to under-perform the Agricultural Bank. In addition to that, Sterling Construction is 3.01 times more volatile than Agricultural Bank of. It trades about -0.09 of its total potential returns per unit of risk. Agricultural Bank of is currently generating about 0.08 per unit of volatility. If you would invest  53.00  in Agricultural Bank of on December 2, 2024 and sell it today you would earn a total of  3.00  from holding Agricultural Bank of or generate 5.66% return on investment over 90 days.

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

Sterling Construction  vs.  Agricultural Bank of

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 uncertain 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.

Agricultural Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agricultural Bank of are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Agricultural Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sterling Construction and Agricultural Bank

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

The idea behind Sterling Construction and Agricultural Bank of 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.