Correlation Between Grom Social and NLS Pharmaceutics

Can any of the company-specific risk be diversified away by investing in both Grom Social and NLS Pharmaceutics 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 NLS Pharmaceutics 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 NLS Pharmaceutics AG, you can compare the effects of market volatilities on Grom Social and NLS Pharmaceutics 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 NLS Pharmaceutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grom Social and NLS Pharmaceutics.

Diversification Opportunities for Grom Social and NLS Pharmaceutics

0.22

Correlation Coefficient

Grom Social  NLS Pharmaceutics

Modest diversification

The 3 months correlation between Grom and NLS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Grom Social Enterprises and NLS Pharmaceutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NLS Pharmaceutics 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 NLS Pharmaceutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NLS Pharmaceutics has no effect on the direction of Grom Social i.e., Grom Social and NLS Pharmaceutics go up and down completely randomly.

Pair Corralation between Grom Social and NLS Pharmaceutics

If you would invest  1.70  in NLS Pharmaceutics AG on September 12, 2024 and sell it today you would lose (0.80) from holding NLS Pharmaceutics AG or give up 47.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Grom Social Enterprises  vs.  NLS Pharmaceutics AG

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 fairly stable primary indicators, Grom Social is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

NLS Pharmaceutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NLS Pharmaceutics AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NLS Pharmaceutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grom Social and NLS Pharmaceutics

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

The idea behind Grom Social Enterprises and NLS Pharmaceutics AG 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.