Correlation Between GRIN and REDLANG

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

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

Diversification Opportunities for GRIN and REDLANG

0.75

Correlation Coefficient

GRIN  REDLANG

Poor diversification

The 3 months correlation between GRIN and REDLANG is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding GRIN and REDLANG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDLANG and GRIN 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 GRIN are associated (or correlated) with REDLANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDLANG has no effect on the direction of GRIN i.e., GRIN and REDLANG go up and down completely randomly.

Pair Corralation between GRIN and REDLANG

Assuming the 90 days trading horizon GRIN is expected to under-perform the REDLANG. But the crypto coin apears to be less risky and, when comparing its historical volatility, GRIN is 1.79 times less risky than REDLANG. The crypto coin trades about -0.12 of its potential returns per unit of risk. The REDLANG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.11  in REDLANG on November 27, 2024 and sell it today you would lose (0.03) from holding REDLANG or give up 30.28% of portfolio value over 90 days.

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

GRIN  vs.  REDLANG

GRIN

Risk-Adjusted Performance

Very Weak

Over the last 90 days GRIN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for GRIN shareholders.

REDLANG

Risk-Adjusted Performance

Very Weak

Over the last 90 days REDLANG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady essential indicators, REDLANG may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with GRIN and REDLANG

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

The idea behind GRIN and REDLANG 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.