Correlation Between Triad Group and Grieg Seafood

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

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

Diversification Opportunities for Triad Group and Grieg Seafood

0.75

Correlation Coefficient

Triad Group  Grieg Seafood

Poor diversification

The 3 months correlation between Triad and Grieg is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Triad Group PLC and Grieg Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grieg Seafood and Triad 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 Triad Group PLC are associated (or correlated) with Grieg Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grieg Seafood has no effect on the direction of Triad Group i.e., Triad Group and Grieg Seafood go up and down completely randomly.

Pair Corralation between Triad Group and Grieg Seafood

Assuming the 90 days trading horizon Triad Group is expected to generate 6.11 times less return on investment than Grieg Seafood. But when comparing it to its historical volatility, Triad Group PLC is 1.19 times less risky than Grieg Seafood. It trades about 0.03 of its potential returns per unit of risk. Grieg Seafood is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,903  in Grieg Seafood on September 2, 2024 and sell it today you would earn a total of  1,177  from holding Grieg Seafood or generate 24.01% return on investment over 90 days.

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

Triad Group PLC  vs.  Grieg Seafood

Triad Group PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Triad Group PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Triad Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Grieg Seafood

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grieg Seafood are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grieg Seafood unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Triad Group and Grieg Seafood

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

The idea behind Triad Group PLC and Grieg Seafood 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.