Correlation Between LANSON-BCC INH and Granite Construction
Can any of the company-specific risk be diversified away by investing in both LANSON-BCC INH and Granite Construction 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 LANSON-BCC INH and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LANSON BCC INH EO and Granite Construction, you can compare the effects of market volatilities on LANSON-BCC INH and Granite Construction 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 LANSON-BCC INH with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of LANSON-BCC INH and Granite Construction.
Diversification Opportunities for LANSON-BCC INH and Granite Construction
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LANSON-BCC and Granite is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding LANSON BCC INH EO and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and LANSON-BCC INH 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 LANSON BCC INH EO are associated (or correlated) with Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of LANSON-BCC INH i.e., LANSON-BCC INH and Granite Construction go up and down completely randomly.
Pair Corralation between LANSON-BCC INH and Granite Construction
Assuming the 90 days horizon LANSON-BCC INH is expected to generate 7.26 times less return on investment than Granite Construction. But when comparing it to its historical volatility, LANSON BCC INH EO is 1.33 times less risky than Granite Construction. It trades about 0.02 of its potential returns per unit of risk. Granite Construction is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,240 in Granite Construction on September 5, 2024 and sell it today you would earn a total of 6,160 from holding Granite Construction or generate 190.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LANSON BCC INH EO vs. Granite Construction
Performance |
| Timeline |
| LANSON BCC INH |
| Granite Construction |
LANSON-BCC INH and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LANSON-BCC INH and Granite Construction
The main advantage of trading using opposite LANSON-BCC INH and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LANSON-BCC INH position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.| LANSON-BCC INH vs. Granite Construction | LANSON-BCC INH vs. WIMFARM SA EO | LANSON-BCC INH vs. Hitachi Construction Machinery | LANSON-BCC INH vs. CarsalesCom |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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