Correlation Between Granite Construction and Samsung Electronics

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

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

Diversification Opportunities for Granite Construction and Samsung Electronics

0.49

Correlation Coefficient

Granite Construction  Samsung Electronics

Very weak diversification

The 3 months correlation between Granite and Samsung is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Granite Construction i.e., Granite Construction and Samsung Electronics go up and down completely randomly.

Pair Corralation between Granite Construction and Samsung Electronics

Assuming the 90 days trading horizon Granite Construction is expected to generate 0.94 times more return on investment than Samsung Electronics. However, Granite Construction is 1.06 times less risky than Samsung Electronics. It trades about 0.1 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.03 per unit of risk. If you would invest  6,888  in Granite Construction on March 28, 2025 and sell it today you would earn a total of  812.00  from holding Granite Construction or generate 11.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Granite Construction  vs.  Samsung Electronics Co

Granite Construction

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Construction are ranked lower than 7 (%) 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.

Samsung Electronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Samsung Electronics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Granite Construction and Samsung Electronics

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

The idea behind Granite Construction and Samsung Electronics Co 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.