Correlation Between Granite Construction and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Granite Construction and LPKF Laser 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 LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and LPKF Laser Electronics, you can compare the effects of market volatilities on Granite Construction and LPKF Laser 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 LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and LPKF Laser.
Diversification Opportunities for Granite Construction and LPKF Laser
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Granite and LPKF is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics 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 LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Granite Construction i.e., Granite Construction and LPKF Laser go up and down completely randomly.
Pair Corralation between Granite Construction and LPKF Laser
Assuming the 90 days trading horizon Granite Construction is expected to generate 0.74 times more return on investment than LPKF Laser. However, Granite Construction is 1.34 times less risky than LPKF Laser. It trades about 0.18 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.05 per unit of risk. If you would invest 8,587 in Granite Construction on October 23, 2024 and sell it today you would earn a total of 313.00 from holding Granite Construction or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. LPKF Laser Electronics
Performance |
| Timeline |
| Granite Construction |
| LPKF Laser Electronics |
Granite Construction and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and LPKF Laser
The main advantage of trading using opposite Granite Construction and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Granite Construction vs. Canadian Utilities Limited | Granite Construction vs. BE Semiconductor Industries | Granite Construction vs. Marie Brizard Wine | Granite Construction vs. Elmos Semiconductor SE |
| LPKF Laser vs. Honeywell International | LPKF Laser vs. Schneider Electric SE | LPKF Laser vs. Illinois Tool Works | LPKF Laser vs. Eaton PLC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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