Correlation Between Sterling Construction and KION Group

Can any of the company-specific risk be diversified away by investing in both Sterling Construction and KION 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 KION 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 KION Group AG, you can compare the effects of market volatilities on Sterling Construction and KION 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 KION Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and KION Group.

Diversification Opportunities for Sterling Construction and KION Group

-0.43

Correlation Coefficient

Sterling Construction  KION Group

Very good diversification

The 3 months correlation between Sterling and KION is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and KION Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KION Group AG 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 KION Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KION Group AG has no effect on the direction of Sterling Construction i.e., Sterling Construction and KION Group go up and down completely randomly.

Pair Corralation between Sterling Construction and KION Group

Assuming the 90 days horizon Sterling Construction is expected to under-perform the KION Group. In addition to that, Sterling Construction is 1.42 times more volatile than KION Group AG. It trades about -0.12 of its total potential returns per unit of risk. KION Group AG is currently generating about 0.2 per unit of volatility. If you would invest  3,120  in KION Group AG on December 20, 2024 and sell it today you would earn a total of  1,515  from holding KION Group AG or generate 48.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Sterling Construction  vs.  KION Group AG

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 unfluctuating 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.

KION Group AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KION Group AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, KION Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sterling Construction and KION Group

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

The idea behind Sterling Construction and KION Group AG 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.