Correlation Between Griffon and Lizhi

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

By analyzing existing cross correlation between Griffon and Lizhi Inc, you can compare the effects of market volatilities on Griffon and Lizhi 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 Lizhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and Lizhi.

Diversification Opportunities for Griffon and Lizhi

-0.38

Correlation Coefficient

Griffon  Lizhi

Very good diversification

The 3 months correlation between Griffon and Lizhi is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Lizhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhi Inc 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 Lizhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lizhi Inc has no effect on the direction of Griffon i.e., Griffon and Lizhi go up and down completely randomly.

Pair Corralation between Griffon and Lizhi

Considering the 90-day investment horizon Griffon is expected to under-perform the Lizhi. But the stock apears to be less risky and, when comparing its historical volatility, Griffon is 5.41 times less risky than Lizhi. The stock trades about -0.36 of its potential returns per unit of risk. The Lizhi Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  183.00  in Lizhi Inc on October 9, 2024 and sell it today you would earn a total of  26.00  from holding Lizhi Inc or generate 14.21% return on investment over 90 days.

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

Griffon  vs.  Lizhi Inc

Griffon

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Griffon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lizhi Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lizhi Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical and fundamental indicators, Lizhi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Griffon and Lizhi

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

The idea behind Griffon and Lizhi Inc 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.