Correlation Between Grid Dynamics and Kontrol Technologies

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

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

Diversification Opportunities for Grid Dynamics and Kontrol Technologies

0.06

Correlation Coefficient

Grid Dynamics  Kontrol Technologies

Significant diversification

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

Pair Corralation between Grid Dynamics and Kontrol Technologies

Given the investment horizon of 90 days Grid Dynamics Holdings is expected to generate 0.47 times more return on investment than Kontrol Technologies. However, Grid Dynamics Holdings is 2.15 times less risky than Kontrol Technologies. It trades about 0.05 of its potential returns per unit of risk. Kontrol Technologies Corp is currently generating about 0.01 per unit of risk. If you would invest  1,099  in Grid Dynamics Holdings on September 14, 2024 and sell it today you would earn a total of  813.00  from holding Grid Dynamics Holdings or generate 73.98% return on investment over 90 days.

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

Grid Dynamics Holdings  vs.  Kontrol Technologies Corp

Grid Dynamics Holdings

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grid Dynamics Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Grid Dynamics displayed solid returns over the last few months and may actually be approaching a breakup point.

Kontrol Technologies Corp

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Grid Dynamics and Kontrol Technologies

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

The idea behind Grid Dynamics Holdings and Kontrol Technologies Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.