Correlation Between GRIFFIN MINING and Sumitomo Chemical

Can any of the company-specific risk be diversified away by investing in both GRIFFIN MINING and Sumitomo Chemical 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 Sumitomo Chemical 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 Sumitomo Chemical, you can compare the effects of market volatilities on GRIFFIN MINING and Sumitomo Chemical 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 Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRIFFIN MINING and Sumitomo Chemical.

Diversification Opportunities for GRIFFIN MINING and Sumitomo Chemical

0.63

Correlation Coefficient

GRIFFIN MINING  Sumitomo Chemical

Poor diversification

The 3 months correlation between GRIFFIN and Sumitomo is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding GRIFFIN MINING LTD and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical 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 Sumitomo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Chemical has no effect on the direction of GRIFFIN MINING i.e., GRIFFIN MINING and Sumitomo Chemical go up and down completely randomly.

Pair Corralation between GRIFFIN MINING and Sumitomo Chemical

Assuming the 90 days horizon GRIFFIN MINING LTD is expected to generate 0.93 times more return on investment than Sumitomo Chemical. However, GRIFFIN MINING LTD is 1.08 times less risky than Sumitomo Chemical. It trades about 0.05 of its potential returns per unit of risk. Sumitomo Chemical is currently generating about -0.36 per unit of risk. If you would invest  172.00  in GRIFFIN MINING LTD on September 25, 2024 and sell it today you would earn a total of  2.00  from holding GRIFFIN MINING LTD or generate 1.16% 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.  Sumitomo Chemical

GRIFFIN MINING LTD

Risk-Adjusted Performance

1 of 100

Weak

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

Sumitomo Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sumitomo Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GRIFFIN MINING and Sumitomo Chemical

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

The idea behind GRIFFIN MINING LTD and Sumitomo Chemical 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.