Correlation Between Grab Holdings and BuzzFeed

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

By analyzing existing cross correlation between Grab Holdings Limited and BuzzFeed, you can compare the effects of market volatilities on Grab Holdings and BuzzFeed 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 BuzzFeed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grab Holdings and BuzzFeed.

Diversification Opportunities for Grab Holdings and BuzzFeed

0.73

Correlation Coefficient

Grab Holdings  BuzzFeed

Poor diversification

The 3 months correlation between Grab and BuzzFeed is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Grab Holdings Limited and BuzzFeed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BuzzFeed 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 Limited are associated (or correlated) with BuzzFeed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BuzzFeed has no effect on the direction of Grab Holdings i.e., Grab Holdings and BuzzFeed go up and down completely randomly.

Pair Corralation between Grab Holdings and BuzzFeed

Assuming the 90 days horizon Grab Holdings Limited is expected to generate 1.68 times more return on investment than BuzzFeed. However, Grab Holdings is 1.68 times more volatile than BuzzFeed. It trades about 0.24 of its potential returns per unit of risk. BuzzFeed is currently generating about 0.23 per unit of risk. If you would invest  18.00  in Grab Holdings Limited on September 4, 2024 and sell it today you would earn a total of  35.00  from holding Grab Holdings Limited or generate 194.44% return on investment over 90 days.

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

Grab Holdings Limited  vs.  BuzzFeed

Grab Holdings Limited

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grab Holdings Limited are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Grab Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

BuzzFeed

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BuzzFeed are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, BuzzFeed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grab Holdings and BuzzFeed

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

The idea behind Grab Holdings Limited and BuzzFeed 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.