Correlation Between Grab Holdings and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Grab Holdings and Iridium Communications 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 Grab Holdings and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grab Holdings and Iridium Communications, you can compare the effects of market volatilities on Grab Holdings and Iridium Communications 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 Grab Holdings with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grab Holdings and Iridium Communications.
Diversification Opportunities for Grab Holdings and Iridium Communications
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Grab and Iridium is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Grab Holdings and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and Grab Holdings 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 Grab Holdings are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Grab Holdings i.e., Grab Holdings and Iridium Communications go up and down completely randomly.
Pair Corralation between Grab Holdings and Iridium Communications
Given the investment horizon of 90 days Grab Holdings is expected to generate 1.15 times more return on investment than Iridium Communications. However, Grab Holdings is 1.15 times more volatile than Iridium Communications. It trades about 0.16 of its potential returns per unit of risk. Iridium Communications is currently generating about 0.01 per unit of risk. If you would invest 365.00 in Grab Holdings on September 23, 2024 and sell it today you would earn a total of 125.00 from holding Grab Holdings or generate 34.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Grab Holdings vs. Iridium Communications
Performance |
Timeline |
Grab Holdings |
Iridium Communications |
Grab Holdings and Iridium Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grab Holdings and Iridium Communications
The main advantage of trading using opposite Grab Holdings and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grab Holdings position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.Grab Holdings vs. LYFT Inc | Grab Holdings vs. Kingsoft Cloud Holdings | Grab Holdings vs. AMTD Digital | Grab Holdings vs. Uber Technologies |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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