Correlation Between GRIN and Cosmos

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Can any of the company-specific risk be diversified away by investing in both GRIN and Cosmos 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 GRIN and Cosmos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GRIN and Cosmos, you can compare the effects of market volatilities on GRIN and Cosmos 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 GRIN with a short position of Cosmos. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRIN and Cosmos.

Diversification Opportunities for GRIN and Cosmos

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between GRIN and Cosmos is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding GRIN and Cosmos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos and GRIN 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 GRIN are associated (or correlated) with Cosmos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos has no effect on the direction of GRIN i.e., GRIN and Cosmos go up and down completely randomly.

Pair Corralation between GRIN and Cosmos

Assuming the 90 days trading horizon GRIN is expected to under-perform the Cosmos. But the crypto coin apears to be less risky and, when comparing its historical volatility, GRIN is 1.07 times less risky than Cosmos. The crypto coin trades about -0.07 of its potential returns per unit of risk. The Cosmos is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,128  in Cosmos on December 30, 2023 and sell it today you would earn a total of  105.00  from holding Cosmos or generate 9.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

GRIN  vs.  Cosmos

 Performance 
       Timeline  
GRIN 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days GRIN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for GRIN shareholders.
Cosmos 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cosmos exhibited solid returns over the last few months and may actually be approaching a breakup point.

GRIN and Cosmos Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GRIN and Cosmos

The main advantage of trading using opposite GRIN and Cosmos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRIN position performs unexpectedly, Cosmos 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 Cosmos will offset losses from the drop in Cosmos' long position.
The idea behind GRIN and Cosmos 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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