Correlation Between NIP Group and Griffon

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

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

Diversification Opportunities for NIP Group and Griffon

-0.52

Correlation Coefficient

NIP Group  Griffon

Excellent diversification

The 3 months correlation between NIP and Griffon is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NIP Group American and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and NIP Group 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 NIP Group American are associated (or correlated) with Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of NIP Group i.e., NIP Group and Griffon go up and down completely randomly.

Pair Corralation between NIP Group and Griffon

Given the investment horizon of 90 days NIP Group American is expected to generate 1.2 times more return on investment than Griffon. However, NIP Group is 1.2 times more volatile than Griffon. It trades about 0.49 of its potential returns per unit of risk. Griffon is currently generating about -0.02 per unit of risk. If you would invest  550.00  in NIP Group American on September 14, 2024 and sell it today you would earn a total of  168.00  from holding NIP Group American or generate 30.55% return on investment over 90 days.

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

NIP Group American  vs.  Griffon

NIP Group American

Risk-Adjusted Performance

1 of 100

Very Weak

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

Griffon

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Griffon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NIP Group and Griffon

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

The idea behind NIP Group American and Griffon 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 Transaction History module to view history of all your transactions and understand their impact on performance.