Correlation Between IHS Holding and Grab Holdings

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

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

Diversification Opportunities for IHS Holding and Grab Holdings

0.21

Correlation Coefficient

IHS Holding  Grab Holdings

Modest diversification

The 3 months correlation between IHS and Grab is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding IHS Holding and Grab Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grab Holdings and IHS Holding 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 IHS Holding 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 IHS Holding i.e., IHS Holding and Grab Holdings go up and down completely randomly.

Pair Corralation between IHS Holding and Grab Holdings

Considering the 90-day investment horizon IHS Holding is expected to generate 10.66 times less return on investment than Grab Holdings. In addition to that, IHS Holding is 1.3 times more volatile than Grab Holdings. It trades about 0.01 of its total potential returns per unit of risk. Grab Holdings is currently generating about 0.2 per unit of volatility. If you would invest  321.00  in Grab Holdings on February 2, 2024 and sell it today you would earn a total of  28.00  from holding Grab Holdings or generate 8.72% return on investment over 90 days.

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

IHS Holding  vs.  Grab Holdings

IHS Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IHS Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical indicators, IHS Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Grab Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grab Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Grab Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with IHS Holding and Grab Holdings

The main advantage of trading using opposite IHS Holding and Grab Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IHS Holding 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 IHS Holding 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.