Correlation Between Grab Holdings and Tritium DCFC

Can any of the company-specific risk be diversified away by investing in both Grab Holdings and Tritium DCFC 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 Tritium DCFC 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 Tritium DCFC Limited, you can compare the effects of market volatilities on Grab Holdings and Tritium DCFC 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 Tritium DCFC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grab Holdings and Tritium DCFC.

Diversification Opportunities for Grab Holdings and Tritium DCFC

-0.49

Correlation Coefficient

Grab Holdings  Tritium DCFC

Very good diversification

The 3 months correlation between Grab and Tritium is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Grab Holdings Limited and Tritium DCFC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tritium DCFC Limited 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 Tritium DCFC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tritium DCFC Limited has no effect on the direction of Grab Holdings i.e., Grab Holdings and Tritium DCFC go up and down completely randomly.

Pair Corralation between Grab Holdings and Tritium DCFC

Assuming the 90 days horizon Grab Holdings is expected to generate 2.67 times less return on investment than Tritium DCFC. But when comparing it to its historical volatility, Grab Holdings Limited is 2.58 times less risky than Tritium DCFC. It trades about 0.04 of its potential returns per unit of risk. Tritium DCFC Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Tritium DCFC Limited on September 4, 2024 and sell it today you would lose (23.20) from holding Tritium DCFC Limited or give up 92.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	67.88%
Values	Daily Returns

Grab Holdings Limited  vs.  Tritium DCFC Limited

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.

Tritium DCFC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tritium DCFC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Tritium DCFC is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Grab Holdings and Tritium DCFC

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

The idea behind Grab Holdings Limited and Tritium DCFC Limited 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.