Correlation Between Grab Holdings and Embark Technology

Can any of the company-specific risk be diversified away by investing in both Grab Holdings and Embark Technology 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 Embark Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grab Holdings Limited and Embark Technology Warrants, you can compare the effects of market volatilities on Grab Holdings and Embark Technology 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 Embark Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grab Holdings and Embark Technology.

Diversification Opportunities for Grab Holdings and Embark Technology

0.0

Correlation Coefficient

Grab Holdings  Embark Technology

Pay attention - limited upside

The 3 months correlation between Grab and Embark is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Grab Holdings Limited and Embark Technology Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Technology 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 Limited are associated (or correlated) with Embark Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Technology has no effect on the direction of Grab Holdings i.e., Grab Holdings and Embark Technology go up and down completely randomly.

Pair Corralation between Grab Holdings and Embark Technology

Assuming the 90 days horizon Grab Holdings is expected to generate 1.6 times less return on investment than Embark Technology. But when comparing it to its historical volatility, Grab Holdings Limited is 1.85 times less risky than Embark Technology. It trades about 0.02 of its potential returns per unit of risk. Embark Technology Warrants is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3.09  in Embark Technology Warrants on October 11, 2024 and sell it today you would lose (1.57) from holding Embark Technology Warrants or give up 50.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	22.38%
Values	Daily Returns

Grab Holdings Limited  vs.  Embark Technology Warrants

Grab Holdings Limited

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grab Holdings Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Grab Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Embark Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embark Technology Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking signals, Embark Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Grab Holdings and Embark Technology

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

The idea behind Grab Holdings Limited and Embark Technology Warrants 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.