Correlation Between Grab Holdings and Qwest Corp

Can any of the company-specific risk be diversified away by investing in both Grab Holdings and Qwest Corp 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 Grab Holdings and Qwest Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grab Holdings and Qwest Corp 6, you can compare the effects of market volatilities on Grab Holdings and Qwest Corp 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 Grab Holdings with a short position of Qwest Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grab Holdings and Qwest Corp.

Diversification Opportunities for Grab Holdings and Qwest Corp

0.8

Correlation Coefficient

Grab Holdings  Qwest Corp

Very poor diversification

The 3 months correlation between Grab and Qwest is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Grab Holdings and Qwest Corp 6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qwest Corp 6 and Grab Holdings 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 Grab Holdings are associated (or correlated) with Qwest Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qwest Corp 6 has no effect on the direction of Grab Holdings i.e., Grab Holdings and Qwest Corp go up and down completely randomly.

Pair Corralation between Grab Holdings and Qwest Corp

Given the investment horizon of 90 days Grab Holdings is expected to under-perform the Qwest Corp. In addition to that, Grab Holdings is 1.76 times more volatile than Qwest Corp 6. It trades about -0.07 of its total potential returns per unit of risk. Qwest Corp 6 is currently generating about -0.02 per unit of volatility. If you would invest  1,769  in Qwest Corp 6 on September 23, 2024 and sell it today you would lose (13.00) from holding Qwest Corp 6 or give up 0.73% of portfolio value over 90 days.

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

Grab Holdings  vs.  Qwest Corp 6

Grab Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grab Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Grab Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Qwest Corp 6

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qwest Corp 6 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Qwest Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Grab Holdings and Qwest Corp

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

The idea behind Grab Holdings and Qwest Corp 6 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.