Correlation Between Ratch Group and BGrimm Power

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

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

Diversification Opportunities for Ratch Group and BGrimm Power

0.81

Correlation Coefficient

Ratch Group  BGrimm Power

Very poor diversification

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

Pair Corralation between Ratch Group and BGrimm Power

Assuming the 90 days trading horizon Ratch Group Public is expected to generate 1.04 times more return on investment than BGrimm Power. However, Ratch Group is 1.04 times more volatile than BGrimm Power Public. It trades about -0.13 of its potential returns per unit of risk. BGrimm Power Public is currently generating about -0.36 per unit of risk. If you would invest  3,250  in Ratch Group Public on September 24, 2024 and sell it today you would lose (250.00) from holding Ratch Group Public or give up 7.69% of portfolio value over 90 days.

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

Ratch Group Public  vs.  BGrimm Power Public

Ratch Group Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratch Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BGrimm Power Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BGrimm Power Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat 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.

Pair Trading with Ratch Group and BGrimm Power

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

The idea behind Ratch Group Public and BGrimm Power Public 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.