Correlation Between Algorand and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Algorand and Flow Traders 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 Algorand and Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algorand and Flow Traders NV, you can compare the effects of market volatilities on Algorand and Flow Traders 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 Algorand with a short position of Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algorand and Flow Traders.
Diversification Opportunities for Algorand and Flow Traders
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Algorand and Flow is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV and Algorand 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 Algorand are associated (or correlated) with Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Algorand i.e., Algorand and Flow Traders go up and down completely randomly.
Pair Corralation between Algorand and Flow Traders
Assuming the 90 days trading horizon Algorand is expected to generate 5.3 times more return on investment than Flow Traders. However, Algorand is 5.3 times more volatile than Flow Traders NV. It trades about 0.19 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.19 per unit of risk. If you would invest 35.00 in Algorand on October 20, 2024 and sell it today you would earn a total of 12.00 from holding Algorand or generate 34.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Algorand vs. Flow Traders NV
Performance |
| Timeline |
| Algorand |
| Flow Traders NV |
Algorand and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algorand and Flow Traders
The main advantage of trading using opposite Algorand and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algorand position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.The idea behind Algorand and Flow Traders NV 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.| Flow Traders vs. Monks Investment Trust | Flow Traders vs. Livermore Investments Group | Flow Traders vs. EJF Investments | Flow Traders vs. United Internet AG |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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