Correlation Between Grocery Outlet and MoneyHero Limited

Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and MoneyHero Limited 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 Grocery Outlet and MoneyHero Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grocery Outlet Holding and MoneyHero Limited Class, you can compare the effects of market volatilities on Grocery Outlet and MoneyHero Limited 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 Grocery Outlet with a short position of MoneyHero Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and MoneyHero Limited.

Diversification Opportunities for Grocery Outlet and MoneyHero Limited

0.29

Correlation Coefficient

Grocery Outlet  MoneyHero Limited

Modest diversification

The 3 months correlation between Grocery and MoneyHero is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and MoneyHero Limited Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoneyHero Limited Class and Grocery Outlet 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 Grocery Outlet Holding are associated (or correlated) with MoneyHero Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoneyHero Limited Class has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and MoneyHero Limited go up and down completely randomly.

Pair Corralation between Grocery Outlet and MoneyHero Limited

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the MoneyHero Limited. In addition to that, Grocery Outlet is 1.19 times more volatile than MoneyHero Limited Class. It trades about -0.15 of its total potential returns per unit of risk. MoneyHero Limited Class is currently generating about -0.09 per unit of volatility. If you would invest  115.00  in MoneyHero Limited Class on September 22, 2024 and sell it today you would lose (7.00) from holding MoneyHero Limited Class or give up 6.09% of portfolio value over 90 days.

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

Grocery Outlet Holding  vs.  MoneyHero Limited Class

Grocery Outlet Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Grocery Outlet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MoneyHero Limited Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MoneyHero Limited Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, MoneyHero Limited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grocery Outlet and MoneyHero Limited

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

The idea behind Grocery Outlet Holding and MoneyHero Limited Class 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.