Correlation Between G Medical and Grom Social
Can any of the company-specific risk be diversified away by investing in both G Medical and Grom Social 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 G Medical and Grom Social into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G Medical Innovations and Grom Social Enterprises, you can compare the effects of market volatilities on G Medical and Grom Social 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 G Medical with a short position of Grom Social. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Medical and Grom Social.
Diversification Opportunities for G Medical and Grom Social
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between GMVDW and Grom is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding G Medical Innovations and Grom Social Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grom Social Enterprises and G Medical 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 G Medical Innovations are associated (or correlated) with Grom Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grom Social Enterprises has no effect on the direction of G Medical i.e., G Medical and Grom Social go up and down completely randomly.
Pair Corralation between G Medical and Grom Social
Assuming the 90 days horizon G Medical is expected to generate 1.14 times less return on investment than Grom Social. But when comparing it to its historical volatility, G Medical Innovations is 1.35 times less risky than Grom Social. It trades about 0.12 of its potential returns per unit of risk. Grom Social Enterprises is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 100.00 in Grom Social Enterprises on September 2, 2024 and sell it today you would lose (99.00) from holding Grom Social Enterprises or give up 99.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 44.89% |
| Values | Daily Returns |
G Medical Innovations vs. Grom Social Enterprises
Performance |
| Timeline |
| G Medical Innovations |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Grom Social Enterprises |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
G Medical and Grom Social Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G Medical and Grom Social
The main advantage of trading using opposite G Medical and Grom Social positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G Medical position performs unexpectedly, Grom Social 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 Grom Social will offset losses from the drop in Grom Social's long position.The idea behind G Medical Innovations and Grom Social Enterprises 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |