Correlation Between Sterling Construction and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and Australian Agricultural 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 Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and Australian Agricultural, you can compare the effects of market volatilities on Sterling Construction and Australian Agricultural 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 Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and Australian Agricultural.
Diversification Opportunities for Sterling Construction and Australian Agricultural
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sterling and Australian is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural 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 Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Sterling Construction i.e., Sterling Construction and Australian Agricultural go up and down completely randomly.
Pair Corralation between Sterling Construction and Australian Agricultural
Assuming the 90 days horizon Sterling Construction is expected to generate 1.53 times more return on investment than Australian Agricultural. However, Sterling Construction is 1.53 times more volatile than Australian Agricultural. It trades about 0.13 of its potential returns per unit of risk. Australian Agricultural is currently generating about -0.02 per unit of risk. If you would invest 3,020 in Sterling Construction on August 30, 2024 and sell it today you would earn a total of 15,355 from holding Sterling Construction or generate 508.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. Australian Agricultural
Performance |
| Timeline |
| Sterling Construction |
| Australian Agricultural |
Sterling Construction and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and Australian Agricultural
The main advantage of trading using opposite Sterling Construction and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| Sterling Construction vs. QBE Insurance Group | Sterling Construction vs. HK Electric Investments | Sterling Construction vs. REVO INSURANCE SPA | Sterling Construction vs. The Hanover Insurance |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |