Correlation Between Grid Dynamics and PMI

Can any of the company-specific risk be diversified away by investing in both Grid Dynamics and PMI 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 PMI 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 The PMI Group, you can compare the effects of market volatilities on Grid Dynamics and PMI 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 PMI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grid Dynamics and PMI.

Diversification Opportunities for Grid Dynamics and PMI

-0.49

Correlation Coefficient

Grid Dynamics  PMI

Very good diversification

The 3 months correlation between Grid and PMI is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Grid Dynamics Holdings and The PMI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PMI Group 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 PMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PMI Group has no effect on the direction of Grid Dynamics i.e., Grid Dynamics and PMI go up and down completely randomly.

Pair Corralation between Grid Dynamics and PMI

Given the investment horizon of 90 days Grid Dynamics Holdings is expected to generate 0.11 times more return on investment than PMI. However, Grid Dynamics Holdings is 8.72 times less risky than PMI. It trades about 0.15 of its potential returns per unit of risk. The PMI Group is currently generating about -0.22 per unit of risk. If you would invest  1,922  in Grid Dynamics Holdings on September 27, 2024 and sell it today you would earn a total of  131.00  from holding Grid Dynamics Holdings or generate 6.82% return on investment over 90 days.

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

Grid Dynamics Holdings  vs.  The PMI Group

Grid Dynamics Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grid Dynamics Holdings are ranked lower than 17 (%) 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.

PMI Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Grid Dynamics and PMI

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

The idea behind Grid Dynamics Holdings and The PMI Group 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.