Correlation Between Hansa Investment and Griffin Mining

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

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

Diversification Opportunities for Hansa Investment and Griffin Mining

-0.14

Correlation Coefficient

Hansa Investment  Griffin Mining

Good diversification

The 3 months correlation between Hansa and Griffin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Investment and Griffin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffin Mining and Hansa Investment 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 Hansa Investment 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 has no effect on the direction of Hansa Investment i.e., Hansa Investment and Griffin Mining go up and down completely randomly.

Pair Corralation between Hansa Investment and Griffin Mining

Assuming the 90 days trading horizon Hansa Investment is expected to generate 0.67 times more return on investment than Griffin Mining. However, Hansa Investment is 1.5 times less risky than Griffin Mining. It trades about 0.08 of its potential returns per unit of risk. Griffin Mining is currently generating about -0.04 per unit of risk. If you would invest  21,999  in Hansa Investment on September 13, 2024 and sell it today you would earn a total of  1,701  from holding Hansa Investment or generate 7.73% return on investment over 90 days.

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

Hansa Investment  vs.  Griffin Mining

Hansa Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hansa Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Hansa Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Griffin Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Griffin Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Griffin Mining is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hansa Investment and Griffin Mining

The main advantage of trading using opposite Hansa Investment and Griffin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansa Investment 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 Hansa Investment and Griffin Mining 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.