Correlation Between Api Group and Construction Partners

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

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

Diversification Opportunities for Api Group and Construction Partners

0.16

Correlation Coefficient

Api Group  Construction Partners

Average diversification

The 3 months correlation between Api and Construction is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Api Group Corp and Construction Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction Partners and Api Group 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 Api Group Corp are associated (or correlated) with Construction Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction Partners has no effect on the direction of Api Group i.e., Api Group and Construction Partners go up and down completely randomly.

Pair Corralation between Api Group and Construction Partners

Considering the 90-day investment horizon Api Group Corp is expected to under-perform the Construction Partners. But the stock apears to be less risky and, when comparing its historical volatility, Api Group Corp is 1.34 times less risky than Construction Partners. The stock trades about 0.0 of its potential returns per unit of risk. The Construction Partners is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7,955  in Construction Partners on January 25, 2025 and sell it today you would earn a total of  161.00  from holding Construction Partners or generate 2.02% return on investment over 90 days.

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

Api Group Corp  vs.  Construction Partners

Api Group Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Api Group Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Construction Partners

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Construction Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Construction Partners is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Api Group and Construction Partners

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

The idea behind Api Group Corp and Construction Partners 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.