Correlation Between Granite Construction and SGS SA
Can any of the company-specific risk be diversified away by investing in both Granite Construction and SGS SA 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 SGS SA 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 SGS SA, you can compare the effects of market volatilities on Granite Construction and SGS SA 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 SGS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and SGS SA.
Diversification Opportunities for Granite Construction and SGS SA
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Granite and SGS is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA 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 SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Granite Construction i.e., Granite Construction and SGS SA go up and down completely randomly.
Pair Corralation between Granite Construction and SGS SA
Considering the 90-day investment horizon Granite Construction Incorporated is expected to generate 0.84 times more return on investment than SGS SA. However, Granite Construction Incorporated is 1.2 times less risky than SGS SA. It trades about 0.5 of its potential returns per unit of risk. SGS SA is currently generating about -0.25 per unit of risk. If you would invest 8,262 in Granite Construction Incorporated on August 24, 2024 and sell it today you would earn a total of 1,559 from holding Granite Construction Incorporated or generate 18.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Granite Construction Incorpora vs. SGS SA
Performance |
| Timeline |
| Granite Construction |
| SGS SA |
Granite Construction and SGS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and SGS SA
The main advantage of trading using opposite Granite Construction and SGS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, SGS SA 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 SGS SA will offset losses from the drop in SGS SA's long position.| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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