Correlation Between Inflection Point and Griffon

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

By analyzing existing cross correlation between Inflection Point Acquisition and Griffon, you can compare the effects of market volatilities on Inflection Point and Griffon 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 Inflection Point with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflection Point and Griffon.

Diversification Opportunities for Inflection Point and Griffon

0.46

Correlation Coefficient

Inflection Point  Griffon

Very weak diversification

The 3 months correlation between Inflection and Griffon is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Inflection Point 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 Inflection Point Acquisition are associated (or correlated) with Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of Inflection Point i.e., Inflection Point and Griffon go up and down completely randomly.

Pair Corralation between Inflection Point and Griffon

Assuming the 90 days horizon Inflection Point is expected to generate 13.07 times less return on investment than Griffon. But when comparing it to its historical volatility, Inflection Point Acquisition is 16.04 times less risky than Griffon. It trades about 0.2 of its potential returns per unit of risk. Griffon is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  6,270  in Griffon on September 3, 2024 and sell it today you would earn a total of  1,996  from holding Griffon or generate 31.83% return on investment over 90 days.

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

Inflection Point Acquisition  vs.  Griffon

Inflection Point Acq

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Inflection Point is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Griffon

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Griffon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inflection Point and Griffon

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

The idea behind Inflection Point Acquisition and Griffon 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.