Correlation Between Granite Real and BSR Real

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

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

Diversification Opportunities for Granite Real and BSR Real

0.81

Correlation Coefficient

Granite Real  BSR Real

Very poor diversification

The 3 months correlation between Granite and BSR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Granite Real Estate and BSR Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSR Real Estate and Granite Real 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 Real Estate are associated (or correlated) with BSR Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSR Real Estate has no effect on the direction of Granite Real i.e., Granite Real and BSR Real go up and down completely randomly.

Pair Corralation between Granite Real and BSR Real

Assuming the 90 days trading horizon Granite Real Estate is expected to under-perform the BSR Real. But the stock apears to be less risky and, when comparing its historical volatility, Granite Real Estate is 1.03 times less risky than BSR Real. The stock trades about -0.14 of its potential returns per unit of risk. The BSR Real Estate is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,939  in BSR Real Estate on September 16, 2024 and sell it today you would lose (91.00) from holding BSR Real Estate or give up 4.69% of portfolio value over 90 days.

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

Granite Real Estate  vs.  BSR Real Estate

Granite Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Granite Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BSR Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Granite Real and BSR Real

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

The idea behind Granite Real Estate and BSR Real Estate 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.