Correlation Between Granite Construction and Cadeler AS

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

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

Diversification Opportunities for Granite Construction and Cadeler AS

0.59

Correlation Coefficient

Granite Construction  Cadeler AS

Very weak diversification

The 3 months correlation between Granite and Cadeler is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction Incorpora and Cadeler AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadeler AS 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 Incorporated are associated (or correlated) with Cadeler AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadeler AS has no effect on the direction of Granite Construction i.e., Granite Construction and Cadeler AS go up and down completely randomly.

Pair Corralation between Granite Construction and Cadeler AS

Considering the 90-day investment horizon Granite Construction Incorporated is expected to under-perform the Cadeler AS. But the stock apears to be less risky and, when comparing its historical volatility, Granite Construction Incorporated is 1.28 times less risky than Cadeler AS. The stock trades about -0.11 of its potential returns per unit of risk. The Cadeler AS is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,245  in Cadeler AS on December 26, 2024 and sell it today you would lose (153.00) from holding Cadeler AS or give up 6.82% of portfolio value over 90 days.

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

Granite Construction Incorpora  vs.  Cadeler AS

Granite Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Granite Construction Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

Cadeler AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cadeler AS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Cadeler AS is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Granite Construction and Cadeler AS

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

The idea behind Granite Construction Incorporated and Cadeler AS 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.