Correlation Between Elastic NV and Grab Holdings
Can any of the company-specific risk be diversified away by investing in both Elastic NV and Grab Holdings 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 Elastic NV and Grab Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elastic NV and Grab Holdings, you can compare the effects of market volatilities on Elastic NV and Grab Holdings 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 Elastic NV with a short position of Grab Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elastic NV and Grab Holdings.
Diversification Opportunities for Elastic NV and Grab Holdings
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elastic and Grab is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Elastic NV and Grab Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grab Holdings and Elastic NV 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 Elastic NV are associated (or correlated) with Grab Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grab Holdings has no effect on the direction of Elastic NV i.e., Elastic NV and Grab Holdings go up and down completely randomly.
Pair Corralation between Elastic NV and Grab Holdings
Given the investment horizon of 90 days Elastic NV is expected to generate 1.35 times more return on investment than Grab Holdings. However, Elastic NV is 1.35 times more volatile than Grab Holdings. It trades about 0.2 of its potential returns per unit of risk. Grab Holdings is currently generating about -0.04 per unit of risk. If you would invest 9,910 in Elastic NV on November 2, 2024 and sell it today you would earn a total of 1,150 from holding Elastic NV or generate 11.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elastic NV vs. Grab Holdings
Performance |
| Timeline |
| Elastic NV |
| Grab Holdings |
Elastic NV and Grab Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elastic NV and Grab Holdings
The main advantage of trading using opposite Elastic NV and Grab Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elastic NV position performs unexpectedly, Grab Holdings 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 Grab Holdings will offset losses from the drop in Grab Holdings' long position.The idea behind Elastic NV and Grab Holdings 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.| Grab Holdings vs. LYFT Inc | Grab Holdings vs. Kingsoft Cloud Holdings | Grab Holdings vs. AMTD Digital | Grab Holdings vs. Uber Technologies |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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