Correlation Between PSI Software and GRIFFIN MINING

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

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

Diversification Opportunities for PSI Software and GRIFFIN MINING

0.64

Correlation Coefficient

PSI Software  GRIFFIN MINING

Poor diversification

The 3 months correlation between PSI and GRIFFIN is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding PSI Software AG and GRIFFIN MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRIFFIN MINING LTD and PSI Software 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 PSI Software AG 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 LTD has no effect on the direction of PSI Software i.e., PSI Software and GRIFFIN MINING go up and down completely randomly.

Pair Corralation between PSI Software and GRIFFIN MINING

Assuming the 90 days trading horizon PSI Software AG is expected to under-perform the GRIFFIN MINING. But the stock apears to be less risky and, when comparing its historical volatility, PSI Software AG is 1.47 times less risky than GRIFFIN MINING. The stock trades about -0.01 of its potential returns per unit of risk. The GRIFFIN MINING LTD is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  178.00  in GRIFFIN MINING LTD on September 30, 2024 and sell it today you would lose (7.00) from holding GRIFFIN MINING LTD or give up 3.93% of portfolio value over 90 days.

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

PSI Software AG  vs.  GRIFFIN MINING LTD

PSI Software AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

GRIFFIN MINING LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRIFFIN MINING LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PSI Software and GRIFFIN MINING

The main advantage of trading using opposite PSI Software and GRIFFIN MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSI Software 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 PSI Software AG and GRIFFIN MINING LTD 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.