Correlation Between Horizen and GRS

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

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

Diversification Opportunities for Horizen and GRS

0.88

Correlation Coefficient

Horizen  GRS

Very poor diversification

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

Pair Corralation between Horizen and GRS

Assuming the 90 days trading horizon Horizen is expected to generate 1.28 times more return on investment than GRS. However, Horizen is 1.28 times more volatile than GRS. It trades about 0.22 of its potential returns per unit of risk. GRS is currently generating about 0.23 per unit of risk. If you would invest  717.00  in Horizen on September 2, 2024 and sell it today you would earn a total of  916.00  from holding Horizen or generate 127.75% return on investment over 90 days.

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

Horizen  vs.  GRS

Horizen

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Horizen are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Horizen exhibited solid returns over the last few months and may actually be approaching a breakup point.

GRS

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GRS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, GRS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Horizen and GRS

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

The idea behind Horizen and GRS 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.