Correlation Between Tokyu Construction and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Tokyu Construction and Granite 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 Tokyu Construction and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokyu Construction Co and Granite Construction, you can compare the effects of market volatilities on Tokyu Construction and Granite 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 Tokyu Construction with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyu Construction and Granite Construction.
Diversification Opportunities for Tokyu Construction and Granite Construction
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tokyu and Granite is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tokyu Construction Co and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and Tokyu 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 Tokyu Construction Co are associated (or correlated) with Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of Tokyu Construction i.e., Tokyu Construction and Granite Construction go up and down completely randomly.
Pair Corralation between Tokyu Construction and Granite Construction
Assuming the 90 days horizon Tokyu Construction is expected to generate 162.64 times less return on investment than Granite Construction. But when comparing it to its historical volatility, Tokyu Construction Co is 1.51 times less risky than Granite Construction. It trades about 0.0 of its potential returns per unit of risk. Granite Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,835 in Granite Construction on October 28, 2024 and sell it today you would earn a total of 4,665 from holding Granite Construction or generate 121.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tokyu Construction Co vs. Granite Construction
Performance |
| Timeline |
| Tokyu Construction |
| Granite Construction |
Tokyu Construction and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokyu Construction and Granite Construction
The main advantage of trading using opposite Tokyu Construction and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyu Construction position performs unexpectedly, Granite 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 Granite Construction will offset losses from the drop in Granite Construction's long position.| Tokyu Construction vs. Prosiebensat 1 Media | Tokyu Construction vs. PROSIEBENSAT1 MEDIADR4 | Tokyu Construction vs. Townsquare Media | Tokyu Construction vs. Penn National Gaming |
| Granite Construction vs. RCI Hospitality Holdings | Granite Construction vs. ScanSource | Granite Construction vs. PRECISION DRILLING P | Granite Construction vs. CVS 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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