Correlation Between ARB IOT and Grid Dynamics
Can any of the company-specific risk be diversified away by investing in both ARB IOT and Grid Dynamics 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 ARB IOT and Grid Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARB IOT Group and Grid Dynamics Holdings, you can compare the effects of market volatilities on ARB IOT and Grid Dynamics 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 ARB IOT with a short position of Grid Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARB IOT and Grid Dynamics.
Diversification Opportunities for ARB IOT and Grid Dynamics
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ARB and Grid is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ARB IOT Group and Grid Dynamics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Dynamics Holdings and ARB IOT 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 ARB IOT Group are associated (or correlated) with Grid Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Dynamics Holdings has no effect on the direction of ARB IOT i.e., ARB IOT and Grid Dynamics go up and down completely randomly.
Pair Corralation between ARB IOT and Grid Dynamics
Given the investment horizon of 90 days ARB IOT Group is expected to generate 6.91 times more return on investment than Grid Dynamics. However, ARB IOT is 6.91 times more volatile than Grid Dynamics Holdings. It trades about 0.15 of its potential returns per unit of risk. Grid Dynamics Holdings is currently generating about 0.18 per unit of risk. If you would invest 38.00 in ARB IOT Group on August 24, 2024 and sell it today you would earn a total of 17.00 from holding ARB IOT Group or generate 44.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARB IOT Group vs. Grid Dynamics Holdings
Performance |
| Timeline |
| ARB IOT Group |
| Grid Dynamics Holdings |
ARB IOT and Grid Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARB IOT and Grid Dynamics
The main advantage of trading using opposite ARB IOT and Grid Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARB IOT position performs unexpectedly, Grid Dynamics 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 Grid Dynamics will offset losses from the drop in Grid Dynamics' long position.| ARB IOT vs. Formula Systems 1985 | ARB IOT vs. CSP Inc | ARB IOT vs. CLARIVATE PLC | ARB IOT vs. BigBearai Holdings |
| Grid Dynamics vs. ExlService Holdings | Grid Dynamics vs. ASGN Inc | Grid Dynamics vs. WNS Holdings | Grid Dynamics vs. Gartner |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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