Correlation Between Primary Health and Griffin Mining

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

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

Diversification Opportunities for Primary Health and Griffin Mining

0.57

Correlation Coefficient

Primary Health  Griffin Mining

Very weak diversification

The 3 months correlation between Primary and Griffin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Primary Health Properties and Griffin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffin Mining and Primary Health 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 Primary Health Properties 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 Primary Health i.e., Primary Health and Griffin Mining go up and down completely randomly.

Pair Corralation between Primary Health and Griffin Mining

Assuming the 90 days trading horizon Primary Health is expected to generate 4.13 times less return on investment than Griffin Mining. But when comparing it to its historical volatility, Primary Health Properties is 1.83 times less risky than Griffin Mining. It trades about 0.07 of its potential returns per unit of risk. Griffin Mining is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  14,600  in Griffin Mining on December 23, 2024 and sell it today you would earn a total of  3,700  from holding Griffin Mining or generate 25.34% return on investment over 90 days.

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

Primary Health Properties  vs.  Griffin Mining

Primary Health Properties

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Primary Health Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Primary Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Griffin Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Griffin Mining are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Griffin Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Primary Health and Griffin Mining

The main advantage of trading using opposite Primary Health and Griffin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primary Health 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 Primary Health Properties 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.