Correlation Between Strategic Investments and GROUNDS REST

Can any of the company-specific risk be diversified away by investing in both Strategic Investments and GROUNDS REST 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 Strategic Investments and GROUNDS REST into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Strategic Investments AS and GROUNDS REST NA, you can compare the effects of market volatilities on Strategic Investments and GROUNDS REST 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 Strategic Investments with a short position of GROUNDS REST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and GROUNDS REST.

Diversification Opportunities for Strategic Investments and GROUNDS REST

-0.19

Correlation Coefficient

Strategic Investments  GROUNDS REST

Good diversification

The 3 months correlation between Strategic and GROUNDS is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and GROUNDS REST NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GROUNDS REST NA and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with GROUNDS REST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GROUNDS REST NA has no effect on the direction of Strategic Investments i.e., Strategic Investments and GROUNDS REST go up and down completely randomly.

Pair Corralation between Strategic Investments and GROUNDS REST

Assuming the 90 days horizon Strategic Investments AS is expected to generate 1.17 times more return on investment than GROUNDS REST. However, Strategic Investments is 1.17 times more volatile than GROUNDS REST NA. It trades about 0.04 of its potential returns per unit of risk. GROUNDS REST NA is currently generating about -0.01 per unit of risk. If you would invest  9.15  in Strategic Investments AS on October 23, 2024 and sell it today you would earn a total of  3.85  from holding Strategic Investments AS or generate 42.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Strategic Investments AS  vs.  GROUNDS REST NA

Strategic Investments

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Investments AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Strategic Investments reported solid returns over the last few months and may actually be approaching a breakup point.

GROUNDS REST NA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GROUNDS REST NA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, GROUNDS REST reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strategic Investments and GROUNDS REST

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

The idea behind Strategic Investments AS and GROUNDS REST NA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.