Correlation Between Grom Social and Hello

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

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

Diversification Opportunities for Grom Social and Hello

-0.26

Correlation Coefficient

Grom Social  Hello

Very good diversification

The 3 months correlation between Grom and Hello is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Grom Social Enterprises and Hello Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hello Group and Grom Social 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 Grom Social Enterprises are associated (or correlated) with Hello. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hello Group has no effect on the direction of Grom Social i.e., Grom Social and Hello go up and down completely randomly.

Pair Corralation between Grom Social and Hello

Given the investment horizon of 90 days Grom Social Enterprises is expected to under-perform the Hello. In addition to that, Grom Social is 2.99 times more volatile than Hello Group. It trades about -0.15 of its total potential returns per unit of risk. Hello Group is currently generating about 0.0 per unit of volatility. If you would invest  921.00  in Hello Group on October 24, 2024 and sell it today you would lose (195.00) from holding Hello Group or give up 21.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.35%
Values	Daily Returns

Grom Social Enterprises  vs.  Hello Group

Grom Social Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grom Social Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Grom Social is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Hello Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hello Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Hello may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Grom Social and Hello

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

The idea behind Grom Social Enterprises and Hello Group 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.