Correlation Between G Capital and B GRIMM

Can any of the company-specific risk be diversified away by investing in both G Capital and B GRIMM 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 G Capital and B GRIMM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G Capital Public and B GRIMM POWER, you can compare the effects of market volatilities on G Capital and B GRIMM 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 G Capital with a short position of B GRIMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Capital and B GRIMM.

Diversification Opportunities for G Capital and B GRIMM

0.89

Correlation Coefficient

G Capital  B GRIMM

Very poor diversification

The 3 months correlation between GCAP and BGRIM-R is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and B GRIMM POWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B GRIMM POWER and G Capital 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 G Capital Public are associated (or correlated) with B GRIMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B GRIMM POWER has no effect on the direction of G Capital i.e., G Capital and B GRIMM go up and down completely randomly.

Pair Corralation between G Capital and B GRIMM

Assuming the 90 days trading horizon G Capital Public is expected to under-perform the B GRIMM. In addition to that, G Capital is 3.1 times more volatile than B GRIMM POWER. It trades about -0.11 of its total potential returns per unit of risk. B GRIMM POWER is currently generating about -0.17 per unit of volatility. If you would invest  2,054  in B GRIMM POWER on September 29, 2024 and sell it today you would lose (124.00) from holding B GRIMM POWER or give up 6.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

G Capital Public  vs.  B GRIMM POWER

G Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

B GRIMM POWER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B GRIMM POWER has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with G Capital and B GRIMM

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

The idea behind G Capital Public and B GRIMM POWER 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.

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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.