Correlation Between Vertex and Grab Holdings

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

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

Diversification Opportunities for Vertex and Grab Holdings

0.19

Correlation Coefficient

Vertex  Grab Holdings

Average diversification

The 3 months correlation between Vertex and Grab is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Vertex and Grab Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grab Holdings and Vertex 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 Vertex 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 Vertex i.e., Vertex and Grab Holdings go up and down completely randomly.

Pair Corralation between Vertex and Grab Holdings

Given the investment horizon of 90 days Vertex is expected to under-perform the Grab Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Vertex is 1.07 times less risky than Grab Holdings. The stock trades about -0.16 of its potential returns per unit of risk. The Grab Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  476.00  in Grab Holdings on December 28, 2024 and sell it today you would earn a total of  4.00  from holding Grab Holdings or generate 0.84% return on investment over 90 days.

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

Vertex  vs.  Grab Holdings

Vertex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vertex 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Grab Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grab Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Grab Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vertex and Grab Holdings

The main advantage of trading using opposite Vertex and Grab Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertex 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 Vertex 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.