Correlation Between Granite Construction and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Hitachi 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 Granite Construction and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and Hitachi Construction Machinery, you can compare the effects of market volatilities on Granite Construction and Hitachi 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 Granite Construction with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Hitachi Construction.
Diversification Opportunities for Granite Construction and Hitachi Construction
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Granite and Hitachi is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction 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 Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of Granite Construction i.e., Granite Construction and Hitachi Construction go up and down completely randomly.
Pair Corralation between Granite Construction and Hitachi Construction
Assuming the 90 days trading horizon Granite Construction is expected to under-perform the Hitachi Construction. But the stock apears to be less risky and, when comparing its historical volatility, Granite Construction is 1.05 times less risky than Hitachi Construction. The stock trades about -0.23 of its potential returns per unit of risk. The Hitachi Construction Machinery is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,280 in Hitachi Construction Machinery on November 28, 2024 and sell it today you would earn a total of 80.00 from holding Hitachi Construction Machinery or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Granite Construction vs. Hitachi Construction Machinery
Performance |
| Timeline |
| Granite Construction |
| Hitachi Construction |
Granite Construction and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Hitachi Construction
The main advantage of trading using opposite Granite Construction and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Hitachi 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 Hitachi Construction will offset losses from the drop in Hitachi Construction's long position.| Granite Construction vs. Broadridge Financial Solutions | Granite Construction vs. Liberty Broadband | Granite Construction vs. BROADPEAK SA EO | Granite Construction vs. Suntory Beverage Food |
| Hitachi Construction vs. BW OFFSHORE LTD | Hitachi Construction vs. Planet Fitness | Hitachi Construction vs. WESANA HEALTH HOLD | Hitachi Construction vs. Phibro Animal Health |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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