Correlation Between BW Offshore and Griffin Mining

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

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

Diversification Opportunities for BW Offshore and Griffin Mining

0.33

Correlation Coefficient

BW Offshore  Griffin Mining

Weak diversification

The 3 months correlation between 0RKH and Griffin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Griffin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffin Mining and BW Offshore 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 BW Offshore are associated (or correlated) with Griffin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffin Mining has no effect on the direction of BW Offshore i.e., BW Offshore and Griffin Mining go up and down completely randomly.

Pair Corralation between BW Offshore and Griffin Mining

Assuming the 90 days trading horizon BW Offshore is expected to generate 1.59 times less return on investment than Griffin Mining. In addition to that, BW Offshore is 1.28 times more volatile than Griffin Mining. It trades about 0.04 of its total potential returns per unit of risk. Griffin Mining is currently generating about 0.07 per unit of volatility. If you would invest  7,570  in Griffin Mining on September 19, 2024 and sell it today you would earn a total of  6,930  from holding Griffin Mining or generate 91.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.6%
Values	Daily Returns

BW Offshore  vs.  Griffin Mining

BW Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BW Offshore is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Griffin Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Griffin Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Griffin Mining is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BW Offshore and Griffin Mining

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

The idea behind BW Offshore and Griffin Mining 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.