Correlation Between GRS and Litecoin

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Can any of the company-specific risk be diversified away by investing in both GRS and Litecoin 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 GRS and Litecoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GRS and Litecoin, you can compare the effects of market volatilities on GRS and Litecoin 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 GRS with a short position of Litecoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRS and Litecoin.

Diversification Opportunities for GRS and Litecoin

GRSLitecoinDiversified AwayGRSLitecoinDiversified Away100%
0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between GRS and Litecoin is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding GRS and Litecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litecoin and GRS 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 GRS are associated (or correlated) with Litecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litecoin has no effect on the direction of GRS i.e., GRS and Litecoin go up and down completely randomly.

Pair Corralation between GRS and Litecoin

Assuming the 90 days trading horizon GRS is expected to under-perform the Litecoin. But the crypto coin apears to be less risky and, when comparing its historical volatility, GRS is 1.44 times less risky than Litecoin. The crypto coin trades about -0.09 of its potential returns per unit of risk. The Litecoin is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  12,387  in Litecoin on November 25, 2024 and sell it today you would earn a total of  208.00  from holding Litecoin or generate 1.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

GRS  vs.  Litecoin

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -100102030405060
JavaScript chart by amCharts 3.21.15GRS LTC
       Timeline  
GRS 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days GRS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for GRS shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.40.50.60.70.80.9
Litecoin 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Litecoin are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Litecoin exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb90100110120130140

GRS and Litecoin Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-23.96-17.94-11.93-5.910.16.1512.3118.4624.62 0.00600.00650.00700.00750.0080
JavaScript chart by amCharts 3.21.15GRS LTC
       Returns  

Pair Trading with GRS and Litecoin

The main advantage of trading using opposite GRS and Litecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRS position performs unexpectedly, Litecoin 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 Litecoin will offset losses from the drop in Litecoin's long position.
The idea behind GRS and Litecoin 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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