Correlation Between Fevertree Drinks and GRIFFIN MINING

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

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

Diversification Opportunities for Fevertree Drinks and GRIFFIN MINING

0.39

Correlation Coefficient

Fevertree Drinks  GRIFFIN MINING

Weak diversification

The 3 months correlation between Fevertree and GRIFFIN is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC and GRIFFIN MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRIFFIN MINING LTD and Fevertree Drinks 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 Fevertree Drinks PLC 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 LTD has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and GRIFFIN MINING go up and down completely randomly.

Pair Corralation between Fevertree Drinks and GRIFFIN MINING

Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to under-perform the GRIFFIN MINING. In addition to that, Fevertree Drinks is 1.18 times more volatile than GRIFFIN MINING LTD. It trades about -0.02 of its total potential returns per unit of risk. GRIFFIN MINING LTD is currently generating about 0.1 per unit of volatility. If you would invest  172.00  in GRIFFIN MINING LTD on December 5, 2024 and sell it today you would earn a total of  52.00  from holding GRIFFIN MINING LTD or generate 30.23% return on investment over 90 days.

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

Fevertree Drinks PLC  vs.  GRIFFIN MINING LTD

Fevertree Drinks PLC

Risk-Adjusted Performance

Very Weak

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

GRIFFIN MINING LTD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GRIFFIN MINING LTD are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GRIFFIN MINING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fevertree Drinks and GRIFFIN MINING

The main advantage of trading using opposite Fevertree Drinks and GRIFFIN MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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 Fevertree Drinks PLC and GRIFFIN MINING LTD 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.