Correlation Between Veolia Environnement and GRIFFIN MINING

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

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

Diversification Opportunities for Veolia Environnement and GRIFFIN MINING

0.33

Correlation Coefficient

Veolia Environnement  GRIFFIN MINING

Weak diversification

The 3 months correlation between Veolia and GRIFFIN is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA 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 Veolia Environnement 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 Veolia Environnement SA 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 Veolia Environnement i.e., Veolia Environnement and GRIFFIN MINING go up and down completely randomly.

Pair Corralation between Veolia Environnement and GRIFFIN MINING

Assuming the 90 days trading horizon Veolia Environnement is expected to generate 2.73 times less return on investment than GRIFFIN MINING. But when comparing it to its historical volatility, Veolia Environnement SA is 1.2 times less risky than GRIFFIN MINING. It trades about 0.03 of its potential returns per unit of risk. GRIFFIN MINING LTD is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  81.00  in GRIFFIN MINING LTD on September 13, 2024 and sell it today you would earn a total of  94.00  from holding GRIFFIN MINING LTD or generate 116.05% return on investment over 90 days.

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

Veolia Environnement SA  vs.  GRIFFIN MINING LTD

Veolia Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veolia Environnement SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Veolia Environnement is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GRIFFIN MINING LTD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRIFFIN MINING LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GRIFFIN MINING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Veolia Environnement and GRIFFIN MINING

The main advantage of trading using opposite Veolia Environnement and GRIFFIN MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement 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 Veolia Environnement SA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.