Correlation Between Symbol and GRIN

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

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

Diversification Opportunities for Symbol and GRIN

0.88

Correlation Coefficient

Symbol  GRIN

Very poor diversification

The 3 months correlation between Symbol and GRIN is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Symbol and GRIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRIN and Symbol 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 Symbol are associated (or correlated) with GRIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRIN has no effect on the direction of Symbol i.e., Symbol and GRIN go up and down completely randomly.

Pair Corralation between Symbol and GRIN

Assuming the 90 days trading horizon Symbol is expected to generate 1.52 times more return on investment than GRIN. However, Symbol is 1.52 times more volatile than GRIN. It trades about 0.17 of its potential returns per unit of risk. GRIN is currently generating about 0.15 per unit of risk. If you would invest  1.46  in Symbol on September 2, 2024 and sell it today you would earn a total of  1.58  from holding Symbol or generate 108.22% return on investment over 90 days.

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

Symbol  vs.  GRIN

Symbol

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Symbol are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Symbol exhibited solid returns over the last few months and may actually be approaching a breakup point.

GRIN

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GRIN are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, GRIN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Symbol and GRIN

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

The idea behind Symbol and GRIN 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.