Correlation Between Granite Construction and Hyrican Informationssyst

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

By analyzing existing cross correlation between Granite Construction and Hyrican Informationssysteme Aktiengesellschaft, you can compare the effects of market volatilities on Granite Construction and Hyrican Informationssyst 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 Hyrican Informationssyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Hyrican Informationssyst.

Diversification Opportunities for Granite Construction and Hyrican Informationssyst

0.69

Correlation Coefficient

Granite Construction  Hyrican Informationssyst

Poor diversification

The 3 months correlation between Granite and Hyrican is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and Hyrican Informationssysteme Ak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyrican Informationssyst 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 are associated (or correlated) with Hyrican Informationssyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyrican Informationssyst has no effect on the direction of Granite Construction i.e., Granite Construction and Hyrican Informationssyst go up and down completely randomly.

Pair Corralation between Granite Construction and Hyrican Informationssyst

Assuming the 90 days trading horizon Granite Construction is expected to generate 0.72 times more return on investment than Hyrican Informationssyst. However, Granite Construction is 1.39 times less risky than Hyrican Informationssyst. It trades about 0.2 of its potential returns per unit of risk. Hyrican Informationssysteme Aktiengesellschaft is currently generating about 0.03 per unit of risk. If you would invest  6,937  in Granite Construction on September 17, 2024 and sell it today you would earn a total of  1,963  from holding Granite Construction or generate 28.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Granite Construction  vs.  Hyrican Informationssysteme Ak

Granite Construction

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Construction are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Granite Construction unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hyrican Informationssyst

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hyrican Informationssysteme Aktiengesellschaft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Hyrican Informationssyst is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Granite Construction and Hyrican Informationssyst

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

The idea behind Granite Construction and Hyrican Informationssysteme Aktiengesellschaft 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.