Correlation Between Sumitomo Mitsui and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui 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 Sumitomo Mitsui and Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Construction and Granite Construction, you can compare the effects of market volatilities on Sumitomo Mitsui 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 Sumitomo Mitsui with a short position of Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Granite Construction.
Diversification Opportunities for Sumitomo Mitsui and Granite Construction
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Granite is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and Sumitomo Mitsui 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 Sumitomo Mitsui Construction 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 Sumitomo Mitsui i.e., Sumitomo Mitsui and Granite Construction go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Granite Construction
Assuming the 90 days horizon Sumitomo Mitsui is expected to generate 3.78 times less return on investment than Granite Construction. But when comparing it to its historical volatility, Sumitomo Mitsui Construction is 1.32 times less risky than Granite Construction. It trades about 0.11 of its potential returns per unit of risk. Granite Construction is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 6,388 in Granite Construction on September 6, 2024 and sell it today you would earn a total of 3,062 from holding Granite Construction or generate 47.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Sumitomo Mitsui Construction vs. Granite Construction
Performance |
Timeline |
Sumitomo Mitsui Cons |
Granite Construction |
Sumitomo Mitsui and Granite Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sumitomo Mitsui and Granite Construction
The main advantage of trading using opposite Sumitomo Mitsui and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui 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.Sumitomo Mitsui vs. THORNEY TECHS LTD | Sumitomo Mitsui vs. ALEFARM BREWING DK 05 | Sumitomo Mitsui vs. PKSHA TECHNOLOGY INC | Sumitomo Mitsui vs. NetSol Technologies |
Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |