Correlation Between B GRIMM and Electricity Generating

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

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

Diversification Opportunities for B GRIMM and Electricity Generating

0.12

Correlation Coefficient

B GRIMM  Electricity Generating

Average diversification

The 3 months correlation between BGRIM-R and Electricity is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding B GRIMM POWER and Electricity Generating Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electricity Generating and B GRIMM 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 B GRIMM POWER are associated (or correlated) with Electricity Generating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electricity Generating has no effect on the direction of B GRIMM i.e., B GRIMM and Electricity Generating go up and down completely randomly.

Pair Corralation between B GRIMM and Electricity Generating

Assuming the 90 days trading horizon B GRIMM POWER is expected to under-perform the Electricity Generating. In addition to that, B GRIMM is 2.51 times more volatile than Electricity Generating Public. It trades about -0.38 of its total potential returns per unit of risk. Electricity Generating Public is currently generating about -0.43 per unit of volatility. If you would invest  12,450  in Electricity Generating Public on October 11, 2024 and sell it today you would lose (1,150) from holding Electricity Generating Public or give up 9.24% of portfolio value over 90 days.

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

B GRIMM POWER  vs.  Electricity Generating Public

B GRIMM POWER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B GRIMM POWER has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Electricity Generating

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electricity Generating Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with B GRIMM and Electricity Generating

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

The idea behind B GRIMM POWER and Electricity Generating Public 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.