Correlation Between Hello and Golden Grail

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

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

Diversification Opportunities for Hello and Golden Grail

0.35

Correlation Coefficient

Hello  Golden Grail

Weak diversification

The 3 months correlation between Hello and Golden is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Golden Grail Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Grail Technology and Hello 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 Hello Group are associated (or correlated) with Golden Grail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Grail Technology has no effect on the direction of Hello i.e., Hello and Golden Grail go up and down completely randomly.

Pair Corralation between Hello and Golden Grail

Given the investment horizon of 90 days Hello Group is expected to under-perform the Golden Grail. But the stock apears to be less risky and, when comparing its historical volatility, Hello Group is 3.77 times less risky than Golden Grail. The stock trades about -0.06 of its potential returns per unit of risk. The Golden Grail Technology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3.05  in Golden Grail Technology on December 27, 2024 and sell it today you would lose (0.94) from holding Golden Grail Technology or give up 30.82% of portfolio value over 90 days.

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

Hello Group  vs.  Golden Grail Technology

Hello Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hello Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Golden Grail Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Grail Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Golden Grail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hello and Golden Grail

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

The idea behind Hello Group and Golden Grail Technology 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.