Correlation Between Griffon and Abcellera Biologics

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

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

Diversification Opportunities for Griffon and Abcellera Biologics

0.69

Correlation Coefficient

Griffon  Abcellera Biologics

Poor diversification

The 3 months correlation between Griffon and Abcellera is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Abcellera Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abcellera Biologics and Griffon 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 Griffon are associated (or correlated) with Abcellera Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abcellera Biologics has no effect on the direction of Griffon i.e., Griffon and Abcellera Biologics go up and down completely randomly.

Pair Corralation between Griffon and Abcellera Biologics

Considering the 90-day investment horizon Griffon is expected to generate 0.43 times more return on investment than Abcellera Biologics. However, Griffon is 2.33 times less risky than Abcellera Biologics. It trades about 0.0 of its potential returns per unit of risk. Abcellera Biologics is currently generating about -0.05 per unit of risk. If you would invest  7,244  in Griffon on December 21, 2024 and sell it today you would lose (93.00) from holding Griffon or give up 1.28% of portfolio value over 90 days.

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

Griffon  vs.  Abcellera Biologics

Griffon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Griffon has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Abcellera Biologics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Abcellera Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Griffon and Abcellera Biologics

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

The idea behind Griffon and Abcellera Biologics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.