Correlation Between SOCGEN and Griffon

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

By analyzing existing cross correlation between SOCGEN 4677 15 JUN 27 and Griffon, you can compare the effects of market volatilities on SOCGEN 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 SOCGEN with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOCGEN and Griffon.

Diversification Opportunities for SOCGEN and Griffon

0.47

Correlation Coefficient

SOCGEN  Griffon

Very weak diversification

The 3 months correlation between SOCGEN and Griffon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SOCGEN 4677 15 JUN 27 and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and SOCGEN 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 SOCGEN 4677 15 JUN 27 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 SOCGEN i.e., SOCGEN and Griffon go up and down completely randomly.

Pair Corralation between SOCGEN and Griffon

Assuming the 90 days trading horizon SOCGEN 4677 15 JUN 27 is expected to under-perform the Griffon. But the bond apears to be less risky and, when comparing its historical volatility, SOCGEN 4677 15 JUN 27 is 3.63 times less risky than Griffon. The bond trades about -0.43 of its potential returns per unit of risk. The Griffon is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,773  in Griffon on September 18, 2024 and sell it today you would earn a total of  1,076  from holding Griffon or generate 15.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	22.22%
Values	Daily Returns

SOCGEN 4677 15 JUN 27  vs.  Griffon

SOCGEN 4677 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOCGEN 4677 15 JUN 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for SOCGEN 4677 15 JUN 27 investors.

Griffon

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 7 (%) 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 SOCGEN and Griffon

The main advantage of trading using opposite SOCGEN and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOCGEN 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 SOCGEN 4677 15 JUN 27 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.

Check out your portfolio center.

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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.