Correlation Between Grab Holdings and Otonomo Technologies

Can any of the company-specific risk be diversified away by investing in both Grab Holdings and Otonomo 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 Grab Holdings and Otonomo Technologies 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 Otonomo Technologies, you can compare the effects of market volatilities on Grab Holdings and Otonomo 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 Grab Holdings with a short position of Otonomo Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grab Holdings and Otonomo Technologies.

Diversification Opportunities for Grab Holdings and Otonomo Technologies

0.0

Correlation Coefficient

Grab Holdings  Otonomo Technologies

Pay attention - limited upside

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

Pair Corralation between Grab Holdings and Otonomo Technologies

Assuming the 90 days horizon Grab Holdings is expected to generate 8.56 times less return on investment than Otonomo Technologies. But when comparing it to its historical volatility, Grab Holdings Limited is 2.78 times less risky than Otonomo Technologies. It trades about 0.02 of its potential returns per unit of risk. Otonomo Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.10  in Otonomo Technologies on October 11, 2024 and sell it today you would lose (1.10) from holding Otonomo Technologies or give up 35.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	17.34%
Values	Daily Returns

Grab Holdings Limited  vs.  Otonomo Technologies

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.

Otonomo Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Otonomo Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Otonomo Technologies is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Grab Holdings and Otonomo Technologies

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

The idea behind Grab Holdings Limited and Otonomo Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.