Correlation Between Nomura Research and Grid Dynamics

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

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

Diversification Opportunities for Nomura Research and Grid Dynamics

-0.81

Correlation Coefficient

Nomura Research  Grid Dynamics

Pay attention - limited upside

The 3 months correlation between Nomura and Grid is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Research Institute and Grid Dynamics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Dynamics Holdings and Nomura Research 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 Nomura Research Institute are associated (or correlated) with Grid Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Dynamics Holdings has no effect on the direction of Nomura Research i.e., Nomura Research and Grid Dynamics go up and down completely randomly.

Pair Corralation between Nomura Research and Grid Dynamics

Assuming the 90 days horizon Nomura Research is expected to generate 5.25 times less return on investment than Grid Dynamics. But when comparing it to its historical volatility, Nomura Research Institute is 1.52 times less risky than Grid Dynamics. It trades about 0.11 of its potential returns per unit of risk. Grid Dynamics Holdings is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  1,588  in Grid Dynamics Holdings on September 17, 2024 and sell it today you would earn a total of  324.00  from holding Grid Dynamics Holdings or generate 20.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Nomura Research Institute  vs.  Grid Dynamics Holdings

Nomura Research Institute

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nomura Research Institute has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Grid Dynamics Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grid Dynamics Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Grid Dynamics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nomura Research and Grid Dynamics

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

The idea behind Nomura Research Institute and Grid Dynamics 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.