Correlation Between Falcons Beyond and Griffon

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

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

Diversification Opportunities for Falcons Beyond and Griffon

-0.5

Correlation Coefficient

Falcons Beyond  Griffon

Very good diversification

The 3 months correlation between Falcons and Griffon is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Falcons Beyond Global, and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Falcons Beyond 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 Falcons Beyond Global, 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 Falcons Beyond i.e., Falcons Beyond and Griffon go up and down completely randomly.

Pair Corralation between Falcons Beyond and Griffon

Assuming the 90 days horizon Falcons Beyond Global, is expected to generate 11.95 times more return on investment than Griffon. However, Falcons Beyond is 11.95 times more volatile than Griffon. It trades about 0.11 of its potential returns per unit of risk. Griffon is currently generating about 0.02 per unit of risk. If you would invest  78.00  in Falcons Beyond Global, on December 29, 2024 and sell it today you would earn a total of  22.00  from holding Falcons Beyond Global, or generate 28.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	73.77%
Values	Daily Returns

Falcons Beyond Global,  vs.  Griffon

Falcons Beyond Global,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Falcons Beyond showed solid returns over the last few months and may actually be approaching a breakup point.

Griffon

Risk-Adjusted Performance

Weak

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

Pair Trading with Falcons Beyond and Griffon

The main advantage of trading using opposite Falcons Beyond and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcons Beyond 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 Falcons Beyond Global, 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.