Correlation Between Lumen Technologies and Grab Holdings

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

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

Diversification Opportunities for Lumen Technologies and Grab Holdings

0.14

Correlation Coefficient

Lumen Technologies  Grab Holdings

Average diversification

The 3 months correlation between Lumen and Grab is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and Grab Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grab Holdings and Lumen Technologies 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 Lumen Technologies are associated (or correlated) with Grab Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grab Holdings has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and Grab Holdings go up and down completely randomly.

Pair Corralation between Lumen Technologies and Grab Holdings

Given the investment horizon of 90 days Lumen Technologies is expected to under-perform the Grab Holdings. In addition to that, Lumen Technologies is 1.43 times more volatile than Grab Holdings. It trades about -0.02 of its total potential returns per unit of risk. Grab Holdings is currently generating about 0.14 per unit of volatility. If you would invest  417.00  in Grab Holdings on September 27, 2024 and sell it today you would earn a total of  83.00  from holding Grab Holdings or generate 19.9% return on investment over 90 days.

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

Lumen Technologies  vs.  Grab Holdings

Lumen Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lumen Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Grab Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grab Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Grab Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumen Technologies and Grab Holdings

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

The idea behind Lumen Technologies and Grab Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.