Correlation Between Grid Dynamics and Xalles Holdings

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

Diversification Opportunities for Grid Dynamics and Xalles Holdings

-0.86

Correlation Coefficient

Grid Dynamics  Xalles Holdings

Pay attention - limited upside

The 3 months correlation between Grid and Xalles is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Grid Dynamics Holdings and Xalles Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xalles Holdings 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 Xalles Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xalles Holdings has no effect on the direction of Grid Dynamics i.e., Grid Dynamics and Xalles Holdings go up and down completely randomly.

Pair Corralation between Grid Dynamics and Xalles Holdings

Given the investment horizon of 90 days Grid Dynamics is expected to generate 2.72 times less return on investment than Xalles Holdings. But when comparing it to its historical volatility, Grid Dynamics Holdings is 3.98 times less risky than Xalles Holdings. It trades about 0.05 of its potential returns per unit of risk. Xalles Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.23  in Xalles Holdings on September 14, 2024 and sell it today you would lose (0.17) from holding Xalles Holdings or give up 73.91% of portfolio value over 90 days.

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

Grid Dynamics Holdings  vs.  Xalles Holdings

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.

Xalles Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xalles Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Xalles Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Grid Dynamics and Xalles Holdings

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

The idea behind Grid Dynamics Holdings and Xalles 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..