Correlation Between Graf Global and Uber Technologies

Can any of the company-specific risk be diversified away by investing in both Graf Global and Uber 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 Graf Global and Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Graf Global Corp and Uber Technologies, you can compare the effects of market volatilities on Graf Global and Uber 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 Graf Global with a short position of Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graf Global and Uber Technologies.

Diversification Opportunities for Graf Global and Uber Technologies

0.61

Correlation Coefficient

Graf Global  Uber Technologies

Poor diversification

The 3 months correlation between Graf and Uber is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Graf Global Corp and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and Graf Global 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 Graf Global Corp are associated (or correlated) with Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Graf Global i.e., Graf Global and Uber Technologies go up and down completely randomly.

Pair Corralation between Graf Global and Uber Technologies

Given the investment horizon of 90 days Graf Global is expected to generate 6.12 times less return on investment than Uber Technologies. But when comparing it to its historical volatility, Graf Global Corp is 17.63 times less risky than Uber Technologies. It trades about 0.12 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,958  in Uber Technologies on December 5, 2024 and sell it today you would earn a total of  690.00  from holding Uber Technologies or generate 9.92% return on investment over 90 days.

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

Graf Global Corp  vs.  Uber Technologies

Graf Global Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Graf Global Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Graf Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Uber Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graf Global and Uber Technologies

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

The idea behind Graf Global Corp and Uber 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.