Correlation Between Griffon and BANORT

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Can any of the company-specific risk be diversified away by investing in both Griffon and BANORT 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 Griffon and BANORT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and BANORT 8 38, you can compare the effects of market volatilities on Griffon and BANORT 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 Griffon with a short position of BANORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and BANORT.

Diversification Opportunities for Griffon and BANORT

 0.63 Correlation Coefficient

Poor diversification

The 3 months correlation between Griffon and BANORT is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and BANORT 8 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANORT 8 38 and Griffon 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 Griffon are associated (or correlated) with BANORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANORT 8 38 has no effect on the direction of Griffon i.e., Griffon and BANORT go up and down completely randomly.

Pair Corralation between Griffon and BANORT

Considering the 90-day investment horizon Griffon is expected to generate 1.04 times more return on investment than BANORT. However, Griffon is 1.04 times more volatile than BANORT 8 38. It trades about -0.23 of its potential returns per unit of risk. BANORT 8 38 is currently generating about -0.33 per unit of risk. If you would invest  7,213  in Griffon on January 20, 2024 and sell it today you would lose (693.00) from holding Griffon or give up 9.61% of portfolio value over 90 days.
 Time Period 3 Months [change] Direction Moves Together Strength Significant Accuracy 72.73% Values Daily Returns

Griffon  vs.  BANORT 8 38

 Performance
 Timeline
 Griffon Correlation Profile

5 of 100

 Weak Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Griffon may actually be approaching a critical reversion point that can send shares even higher in May 2024.
 Performance Backtest Predict
 BANORT 8 38 Correlation Profile

0 of 100

 Weak Strong
Very Weak
Over the last 90 days BANORT 8 38 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BANORT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
 Performance Backtest Predict

Griffon and BANORT Volatility Contrast

 Predicted Return Density
 Returns

Pair Trading with Griffon and BANORT

The main advantage of trading using opposite Griffon and BANORT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, BANORT 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 BANORT will offset losses from the drop in BANORT's long position.
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The idea behind Griffon and BANORT 8 38 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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