Correlation Between DATATEC and Griffon
Can any of the company-specific risk be diversified away by investing in both DATATEC and Griffon 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 DATATEC and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DATATEC LTD 2 and Griffon, you can compare the effects of market volatilities on DATATEC and Griffon 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 DATATEC with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATATEC and Griffon.
Diversification Opportunities for DATATEC and Griffon
Very weak diversification
The 3 months correlation between DATATEC and Griffon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding DATATEC LTD 2 and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and DATATEC 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 DATATEC LTD 2 are associated (or correlated) with Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of DATATEC i.e., DATATEC and Griffon go up and down completely randomly.
Pair Corralation between DATATEC and Griffon
Assuming the 90 days trading horizon DATATEC LTD 2 is expected to generate 0.74 times more return on investment than Griffon. However, DATATEC LTD 2 is 1.34 times less risky than Griffon. It trades about 0.23 of its potential returns per unit of risk. Griffon is currently generating about 0.07 per unit of risk. If you would invest 351.00 in DATATEC LTD 2 on October 14, 2024 and sell it today you would earn a total of 131.00 from holding DATATEC LTD 2 or generate 37.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DATATEC LTD 2 vs. Griffon
Performance |
| Timeline |
| DATATEC LTD 2 |
| Griffon |
DATATEC and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATATEC and Griffon
The main advantage of trading using opposite DATATEC and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATATEC position performs unexpectedly, Griffon 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 Griffon will offset losses from the drop in Griffon's long position.| DATATEC vs. Accenture plc | DATATEC vs. International Business Machines | DATATEC vs. Capgemini SE | DATATEC vs. FUJITSU LTD ADR |
| Griffon vs. Automatic Data Processing | Griffon vs. Information Services International Dentsu | Griffon vs. CANON MARKETING JP | Griffon vs. DATATEC LTD 2 |
Check out your portfolio center.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.
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