Correlation Between LION ONE and Granite Construction

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

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

Diversification Opportunities for LION ONE and Granite Construction

-0.64

Correlation Coefficient

LION ONE  Granite Construction

Excellent diversification

The 3 months correlation between LION and Granite is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction and LION ONE 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 LION ONE METALS 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 LION ONE i.e., LION ONE and Granite Construction go up and down completely randomly.

Pair Corralation between LION ONE and Granite Construction

Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Granite Construction. In addition to that, LION ONE is 1.84 times more volatile than Granite Construction. It trades about -0.05 of its total potential returns per unit of risk. Granite Construction is currently generating about 0.2 per unit of volatility. If you would invest  6,937  in Granite Construction on September 18, 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

LION ONE METALS  vs.  Granite Construction

LION ONE METALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LION ONE METALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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.

Pair Trading with LION ONE and Granite Construction

The main advantage of trading using opposite LION ONE and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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.

The idea behind LION ONE METALS and Granite Construction 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.