Correlation Between Formula Systems and Grid Dynamics

Can any of the company-specific risk be diversified away by investing in both Formula Systems and Grid Dynamics 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 Formula Systems and Grid Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Formula Systems 1985 and Grid Dynamics Holdings, you can compare the effects of market volatilities on Formula Systems and Grid Dynamics 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 Formula Systems with a short position of Grid Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formula Systems and Grid Dynamics.

Diversification Opportunities for Formula Systems and Grid Dynamics

-0.17

Correlation Coefficient

Formula Systems  Grid Dynamics

Good diversification

The 3 months correlation between Formula and Grid is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Formula Systems 1985 and Grid Dynamics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Dynamics Holdings and Formula Systems 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 Formula Systems 1985 are associated (or correlated) with Grid Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Dynamics Holdings has no effect on the direction of Formula Systems i.e., Formula Systems and Grid Dynamics go up and down completely randomly.

Pair Corralation between Formula Systems and Grid Dynamics

Assuming the 90 days horizon Formula Systems 1985 is expected to generate 0.78 times more return on investment than Grid Dynamics. However, Formula Systems 1985 is 1.28 times less risky than Grid Dynamics. It trades about 0.02 of its potential returns per unit of risk. Grid Dynamics Holdings is currently generating about -0.19 per unit of risk. If you would invest  8,900  in Formula Systems 1985 on December 28, 2024 and sell it today you would earn a total of  94.00  from holding Formula Systems 1985 or generate 1.06% return on investment over 90 days.

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

Formula Systems 1985  vs.  Grid Dynamics Holdings

Formula Systems 1985

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Formula Systems 1985 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Formula Systems is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Grid Dynamics Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grid Dynamics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Formula Systems and Grid Dynamics

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

The idea behind Formula Systems 1985 and Grid Dynamics 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.