Correlation Between Granite Construction and Cathay Pacific
Can any of the company-specific risk be diversified away by investing in both Granite Construction and Cathay Pacific 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 Cathay Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction Incorporated and Cathay Pacific Airways, you can compare the effects of market volatilities on Granite Construction and Cathay Pacific 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 Cathay Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Cathay Pacific.
Diversification Opportunities for Granite Construction and Cathay Pacific
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Granite and Cathay is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Cathay Pacific Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Pacific Airways 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 Incorporated are associated (or correlated) with Cathay Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Pacific Airways has no effect on the direction of Granite Construction i.e., Granite Construction and Cathay Pacific go up and down completely randomly.
Pair Corralation between Granite Construction and Cathay Pacific
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.76 times more return on investment than Cathay Pacific. However, Granite Construction Incorporated is 1.31 times less risky than Cathay Pacific. It trades about 0.15 of its potential returns per unit of risk. Cathay Pacific Airways is currently generating about 0.01 per unit of risk. If you would invest 3,907 in Granite Construction Incorporated on September 1, 2024 and sell it today you would earn a total of 6,030 from holding Granite Construction Incorporated or generate 154.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 49.73% |
| Values | Daily Returns |
Granite Construction Incorpora vs. Cathay Pacific Airways
Performance |
| Timeline |
| Granite Construction |
| Cathay Pacific Airways |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Granite Construction and Cathay Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Cathay Pacific
The main advantage of trading using opposite Granite Construction and Cathay Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Cathay Pacific 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 Cathay Pacific will offset losses from the drop in Cathay Pacific's long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
| Cathay Pacific vs. Finnair Oyj | Cathay Pacific vs. easyJet plc | Cathay Pacific vs. Norse Atlantic ASA | Cathay Pacific vs. Air New Zealand |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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