Correlation Between Granite Construction and NIPPON MEAT
Can any of the company-specific risk be diversified away by investing in both Granite Construction and NIPPON MEAT 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 NIPPON MEAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and NIPPON MEAT PACKERS, you can compare the effects of market volatilities on Granite Construction and NIPPON MEAT 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 NIPPON MEAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and NIPPON MEAT.
Diversification Opportunities for Granite Construction and NIPPON MEAT
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Granite and NIPPON is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and NIPPON MEAT PACKERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON MEAT PACKERS 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 NIPPON MEAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON MEAT PACKERS has no effect on the direction of Granite Construction i.e., Granite Construction and NIPPON MEAT go up and down completely randomly.
Pair Corralation between Granite Construction and NIPPON MEAT
Assuming the 90 days trading horizon Granite Construction is expected to under-perform the NIPPON MEAT. But the stock apears to be less risky and, when comparing its historical volatility, Granite Construction is 2.06 times less risky than NIPPON MEAT. The stock trades about -0.36 of its potential returns per unit of risk. The NIPPON MEAT PACKERS is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 3,160 in NIPPON MEAT PACKERS on December 1, 2024 and sell it today you would lose (280.00) from holding NIPPON MEAT PACKERS or give up 8.86% 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. NIPPON MEAT PACKERS
Performance |
| Timeline |
| Granite Construction |
| NIPPON MEAT PACKERS |
Granite Construction and NIPPON MEAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and NIPPON MEAT
The main advantage of trading using opposite Granite Construction and NIPPON MEAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, NIPPON MEAT 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 NIPPON MEAT will offset losses from the drop in NIPPON MEAT's long position.| Granite Construction vs. Hemisphere Energy Corp | Granite Construction vs. COMPUTER MODELLING | Granite Construction vs. Ebro Foods SA | Granite Construction vs. Ribbon Communications |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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