Correlation Between Applied Blockchain and Locafy
Can any of the company-specific risk be diversified away by investing in both Applied Blockchain and Locafy 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 Applied Blockchain and Locafy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Blockchain and Locafy Limited, you can compare the effects of market volatilities on Applied Blockchain and Locafy 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 Applied Blockchain with a short position of Locafy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Blockchain and Locafy.
Diversification Opportunities for Applied Blockchain and Locafy
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and Locafy is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and Locafy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locafy Limited and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with Locafy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locafy Limited has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and Locafy go up and down completely randomly.
Pair Corralation between Applied Blockchain and Locafy
Given the investment horizon of 90 days Applied Blockchain is expected to generate 0.78 times more return on investment than Locafy. However, Applied Blockchain is 1.27 times less risky than Locafy. It trades about 0.33 of its potential returns per unit of risk. Locafy Limited is currently generating about 0.26 per unit of risk. If you would invest 676.00 in Applied Blockchain on September 1, 2024 and sell it today you would earn a total of 368.00 from holding Applied Blockchain or generate 54.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 71.43% |
| Values | Daily Returns |
Applied Blockchain vs. Locafy Limited
Performance |
| Timeline |
| Applied Blockchain |
| Locafy Limited |
Applied Blockchain and Locafy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Blockchain and Locafy
The main advantage of trading using opposite Applied Blockchain and Locafy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Blockchain position performs unexpectedly, Locafy 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 Locafy will offset losses from the drop in Locafy's long position.| Applied Blockchain vs. Magic Empire Global | Applied Blockchain vs. Zhong Yang Financial | Applied Blockchain vs. Netcapital | Applied Blockchain vs. Lazard |
| Locafy vs. Locafy | Locafy vs. Rail Vision Ltd | Locafy vs. Heartbeam Warrant | Locafy vs. Iveda Solutions Warrant |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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