Correlation Between Workday and Grab Holdings

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

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

Diversification Opportunities for Workday and Grab Holdings

0.82

Correlation Coefficient

Workday  Grab Holdings

Very poor diversification

The 3 months correlation between Workday and Grab is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Grab Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grab Holdings and Workday 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 Workday 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 Workday i.e., Workday and Grab Holdings go up and down completely randomly.

Pair Corralation between Workday and Grab Holdings

Given the investment horizon of 90 days Workday is expected to generate 3.48 times less return on investment than Grab Holdings. But when comparing it to its historical volatility, Workday is 1.49 times less risky than Grab Holdings. It trades about 0.06 of its potential returns per unit of risk. Grab Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  369.00  in Grab Holdings on October 6, 2024 and sell it today you would earn a total of  112.00  from holding Grab Holdings or generate 30.35% return on investment over 90 days.

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

Workday  vs.  Grab Holdings

Workday

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Workday are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Workday may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 Workday and Grab Holdings

The main advantage of trading using opposite Workday and Grab Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workday 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 Workday 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.