Correlation Between Granite City and Environmental Solutions

Can any of the company-specific risk be diversified away by investing in both Granite City and Environmental Solutions 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 City and Environmental Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Granite City Food and Environmental Solutions Worldwide, you can compare the effects of market volatilities on Granite City and Environmental Solutions 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 City with a short position of Environmental Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite City and Environmental Solutions.

Diversification Opportunities for Granite City and Environmental Solutions

1.0

Correlation Coefficient

Granite City  Environmental Solutions

No risk reduction

The 3 months correlation between Granite and Environmental is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Granite City Food and Environmental Solutions Worldw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Environmental Solutions and Granite City 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 City Food are associated (or correlated) with Environmental Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Environmental Solutions has no effect on the direction of Granite City i.e., Granite City and Environmental Solutions go up and down completely randomly.

Pair Corralation between Granite City and Environmental Solutions

If you would invest  0.06  in Environmental Solutions Worldwide on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Environmental Solutions Worldwide or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	1.56%
Values	Daily Returns

Granite City Food  vs.  Environmental Solutions Worldw

Granite City Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Granite City Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Granite City is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Environmental Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Environmental Solutions Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Environmental Solutions is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Granite City and Environmental Solutions

The main advantage of trading using opposite Granite City and Environmental Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite City position performs unexpectedly, Environmental Solutions 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 Environmental Solutions will offset losses from the drop in Environmental Solutions' long position.

The idea behind Granite City Food and Environmental Solutions Worldwide pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.