Correlation Between Granite Construction and PURETECH HEALTH
Can any of the company-specific risk be diversified away by investing in both Granite Construction and PURETECH HEALTH 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 Granite Construction and PURETECH HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and PURETECH HEALTH PLC, you can compare the effects of market volatilities on Granite Construction and PURETECH HEALTH 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 Granite Construction with a short position of PURETECH HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and PURETECH HEALTH.
Diversification Opportunities for Granite Construction and PURETECH HEALTH
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Granite and PURETECH is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and PURETECH HEALTH PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PURETECH HEALTH PLC and Granite 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 Granite Construction are associated (or correlated) with PURETECH HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PURETECH HEALTH PLC has no effect on the direction of Granite Construction i.e., Granite Construction and PURETECH HEALTH go up and down completely randomly.
Pair Corralation between Granite Construction and PURETECH HEALTH
Assuming the 90 days trading horizon Granite Construction is expected to generate 0.4 times more return on investment than PURETECH HEALTH. However, Granite Construction is 2.48 times less risky than PURETECH HEALTH. It trades about -0.25 of its potential returns per unit of risk. PURETECH HEALTH PLC is currently generating about -0.27 per unit of risk. If you would invest 9,086 in Granite Construction on October 11, 2024 and sell it today you would lose (486.00) from holding Granite Construction or give up 5.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. PURETECH HEALTH PLC
Performance |
| Timeline |
| Granite Construction |
| PURETECH HEALTH PLC |
Granite Construction and PURETECH HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and PURETECH HEALTH
The main advantage of trading using opposite Granite Construction and PURETECH HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, PURETECH HEALTH 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 PURETECH HEALTH will offset losses from the drop in PURETECH HEALTH's long position.| Granite Construction vs. Chunghwa Telecom Co | Granite Construction vs. Meiko Electronics Co | Granite Construction vs. KIMBALL ELECTRONICS | Granite Construction vs. CITIC Telecom International |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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