Correlation Between Match and Grom Social

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

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

Diversification Opportunities for Match and Grom Social

0.77

Correlation Coefficient

Match  Grom Social

Poor diversification

The 3 months correlation between Match and Grom is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Match Group and Grom Social Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grom Social Enterprises and Match 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 Match Group are associated (or correlated) with Grom Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grom Social Enterprises has no effect on the direction of Match i.e., Match and Grom Social go up and down completely randomly.

Pair Corralation between Match and Grom Social

Given the investment horizon of 90 days Match Group is expected to generate 0.68 times more return on investment than Grom Social. However, Match Group is 1.47 times less risky than Grom Social. It trades about 0.2 of its potential returns per unit of risk. Grom Social Enterprises is currently generating about -0.19 per unit of risk. If you would invest  2,982  in Match Group on March 9, 2024 and sell it today you would earn a total of  220.00  from holding Match Group or generate 7.38% return on investment over 90 days.

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

Match Group  vs.  Grom Social Enterprises

Match Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Match Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Match is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Grom Social Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grom Social Enterprises 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 Stock's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Match and Grom Social

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

The idea behind Match Group and Grom Social Enterprises 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.