Correlation Between Grom Social and Yelp

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

By analyzing existing cross correlation between Grom Social Enterprises and Yelp Inc, you can compare the effects of market volatilities on Grom Social and Yelp 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 Grom Social with a short position of Yelp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grom Social and Yelp.

Diversification Opportunities for Grom Social and Yelp

-0.72

Correlation Coefficient

Grom Social  Yelp

Pay attention - limited upside

The 3 months correlation between Grom and Yelp is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Grom Social Enterprises and Yelp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yelp Inc and Grom Social 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 Grom Social Enterprises are associated (or correlated) with Yelp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yelp Inc has no effect on the direction of Grom Social i.e., Grom Social and Yelp go up and down completely randomly.

Pair Corralation between Grom Social and Yelp

If you would invest  3,493  in Yelp Inc on August 30, 2024 and sell it today you would earn a total of  233.00  from holding Yelp Inc or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Grom Social Enterprises  vs.  Yelp Inc

Grom Social Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grom Social Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Grom Social is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Yelp Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yelp Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Yelp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Grom Social and Yelp

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

The idea behind Grom Social Enterprises and Yelp Inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.