Correlation Between Trainline Plc and Griffin Mining

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

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

Diversification Opportunities for Trainline Plc and Griffin Mining

-0.73

Correlation Coefficient

Trainline Plc  Griffin Mining

Pay attention - limited upside

The 3 months correlation between Trainline and Griffin is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Trainline Plc and Griffin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffin Mining and Trainline Plc 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 Trainline Plc 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 Trainline Plc i.e., Trainline Plc and Griffin Mining go up and down completely randomly.

Pair Corralation between Trainline Plc and Griffin Mining

Assuming the 90 days trading horizon Trainline Plc is expected to generate 1.27 times less return on investment than Griffin Mining. In addition to that, Trainline Plc is 1.18 times more volatile than Griffin Mining. It trades about 0.05 of its total potential returns per unit of risk. Griffin Mining is currently generating about 0.07 per unit of volatility. If you would invest  7,570  in Griffin Mining on September 19, 2024 and sell it today you would earn a total of  6,930  from holding Griffin Mining or generate 91.55% return on investment over 90 days.

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

Trainline Plc  vs.  Griffin Mining

Trainline Plc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trainline Plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Trainline Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 Trainline Plc and Griffin Mining

The main advantage of trading using opposite Trainline Plc and Griffin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trainline Plc 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 Trainline Plc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.