Correlation Between GRIFFIN MINING and PRECISION DRILLING

Can any of the company-specific risk be diversified away by investing in both GRIFFIN MINING and PRECISION DRILLING 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 GRIFFIN MINING and PRECISION DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GRIFFIN MINING LTD and PRECISION DRILLING P, you can compare the effects of market volatilities on GRIFFIN MINING and PRECISION DRILLING 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 GRIFFIN MINING with a short position of PRECISION DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRIFFIN MINING and PRECISION DRILLING.

Diversification Opportunities for GRIFFIN MINING and PRECISION DRILLING

-0.28

Correlation Coefficient

GRIFFIN MINING  PRECISION DRILLING

Very good diversification

The 3 months correlation between GRIFFIN and PRECISION is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding GRIFFIN MINING LTD and PRECISION DRILLING P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRECISION DRILLING and GRIFFIN MINING 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 GRIFFIN MINING LTD are associated (or correlated) with PRECISION DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRECISION DRILLING has no effect on the direction of GRIFFIN MINING i.e., GRIFFIN MINING and PRECISION DRILLING go up and down completely randomly.

Pair Corralation between GRIFFIN MINING and PRECISION DRILLING

Assuming the 90 days horizon GRIFFIN MINING LTD is expected to under-perform the PRECISION DRILLING. But the stock apears to be less risky and, when comparing its historical volatility, GRIFFIN MINING LTD is 1.23 times less risky than PRECISION DRILLING. The stock trades about -0.08 of its potential returns per unit of risk. The PRECISION DRILLING P is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,500  in PRECISION DRILLING P on September 30, 2024 and sell it today you would earn a total of  50.00  from holding PRECISION DRILLING P or generate 0.91% return on investment over 90 days.

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

GRIFFIN MINING LTD  vs.  PRECISION DRILLING P

GRIFFIN MINING LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRIFFIN MINING LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

PRECISION DRILLING

Risk-Adjusted Performance

1 of 100

Very Weak

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

Pair Trading with GRIFFIN MINING and PRECISION DRILLING

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

The idea behind GRIFFIN MINING LTD and PRECISION DRILLING P 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.