Correlation Between Granite Construction and BB Biotech

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

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

Diversification Opportunities for Granite Construction and BB Biotech

0.72

Correlation Coefficient

Granite Construction  BB Biotech

Poor diversification

The 3 months correlation between Granite and BBZA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and BB Biotech AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Biotech AG 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 BB Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Biotech AG has no effect on the direction of Granite Construction i.e., Granite Construction and BB Biotech go up and down completely randomly.

Pair Corralation between Granite Construction and BB Biotech

Assuming the 90 days trading horizon Granite Construction is expected to under-perform the BB Biotech. In addition to that, Granite Construction is 1.13 times more volatile than BB Biotech AG. It trades about -0.16 of its total potential returns per unit of risk. BB Biotech AG is currently generating about -0.08 per unit of volatility. If you would invest  3,603  in BB Biotech AG on December 31, 2024 and sell it today you would lose (348.00) from holding BB Biotech AG or give up 9.66% of portfolio value over 90 days.

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

Granite Construction  vs.  BB Biotech AG

Granite Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Granite Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BB Biotech AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days BB Biotech AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Granite Construction and BB Biotech

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

The idea behind Granite Construction and BB Biotech AG 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.