Correlation Between Granite Construction and Solstad Offshore

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Can any of the company-specific risk be diversified away by investing in both Granite Construction and Solstad Offshore 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 Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and Solstad Offshore ASA, you can compare the effects of market volatilities on Granite Construction and Solstad Offshore 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 Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Solstad Offshore.

Diversification Opportunities for Granite Construction and Solstad Offshore

GraniteSolstadDiversified AwayGraniteSolstadDiversified Away100%
0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Granite and Solstad is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA 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 Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Granite Construction i.e., Granite Construction and Solstad Offshore go up and down completely randomly.

Pair Corralation between Granite Construction and Solstad Offshore

Assuming the 90 days trading horizon Granite Construction is expected to generate 1.88 times less return on investment than Solstad Offshore. But when comparing it to its historical volatility, Granite Construction is 1.89 times less risky than Solstad Offshore. It trades about 0.14 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  260.00  in Solstad Offshore ASA on October 26, 2024 and sell it today you would earn a total of  81.00  from holding Solstad Offshore ASA or generate 31.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Granite Construction  vs.  Solstad Offshore ASA

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0102030
JavaScript chart by amCharts 3.21.15GRG SZL
       Timeline  
Granite Construction 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Granite Construction are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Granite Construction unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan7580859095
Solstad Offshore ASA 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Solstad Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2.62.833.23.43.63.8

Granite Construction and Solstad Offshore Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.11-4.58-3.04-1.510.02731.643.284.926.56 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15GRG SZL
       Returns  

Pair Trading with Granite Construction and Solstad Offshore

The main advantage of trading using opposite Granite Construction and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.
The idea behind Granite Construction and Solstad Offshore ASA 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.
Check out your portfolio center.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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