Correlation Between Grom Social and Iveda Solutions

Can any of the company-specific risk be diversified away by investing in both Grom Social and Iveda Solutions 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 Iveda Solutions 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 Iveda Solutions Warrant, you can compare the effects of market volatilities on Grom Social and Iveda Solutions 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 Iveda Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grom Social and Iveda Solutions.

Diversification Opportunities for Grom Social and Iveda Solutions

-0.27

Correlation Coefficient

Grom Social  Iveda Solutions

Very good diversification

The 3 months correlation between Grom and Iveda is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Grom Social Enterprises and Iveda Solutions Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iveda Solutions Warrant 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 Iveda Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iveda Solutions Warrant has no effect on the direction of Grom Social i.e., Grom Social and Iveda Solutions go up and down completely randomly.

Pair Corralation between Grom Social and Iveda Solutions

Assuming the 90 days horizon Grom Social Enterprises is expected to generate 1.28 times more return on investment than Iveda Solutions. However, Grom Social is 1.28 times more volatile than Iveda Solutions Warrant. It trades about 0.2 of its potential returns per unit of risk. Iveda Solutions Warrant is currently generating about 0.19 per unit of risk. If you would invest  576.00  in Grom Social Enterprises on September 12, 2024 and sell it today you would lose (575.00) from holding Grom Social Enterprises or give up 99.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.35%
Values	Daily Returns

Grom Social Enterprises  vs.  Iveda Solutions Warrant

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 fairly stable primary indicators, Grom Social is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Iveda Solutions Warrant

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iveda Solutions Warrant are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Iveda Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grom Social and Iveda Solutions

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

The idea behind Grom Social Enterprises and Iveda Solutions Warrant 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 Anywhere module to track or share privately all of your investments from the convenience of any device.