Correlation Between GRIFFIN MINING and QBE Insurance

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

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

Diversification Opportunities for GRIFFIN MINING and QBE Insurance

0.69

Correlation Coefficient

GRIFFIN MINING  QBE Insurance

Poor diversification

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

Pair Corralation between GRIFFIN MINING and QBE Insurance

Assuming the 90 days horizon GRIFFIN MINING LTD is expected to generate 1.68 times more return on investment than QBE Insurance. However, GRIFFIN MINING is 1.68 times more volatile than QBE Insurance Group. It trades about 0.1 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.15 per unit of risk. If you would invest  174.00  in GRIFFIN MINING LTD on December 29, 2024 and sell it today you would earn a total of  30.00  from holding GRIFFIN MINING LTD or generate 17.24% return on investment over 90 days.

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

GRIFFIN MINING LTD  vs.  QBE Insurance Group

GRIFFIN MINING LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GRIFFIN MINING LTD are ranked lower than 8 (%) 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.

QBE Insurance Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, QBE Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRIFFIN MINING and QBE Insurance

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

The idea behind GRIFFIN MINING LTD and QBE Insurance Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.