Correlation Between Applied Blockchain and 502413BE6

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Can any of the company-specific risk be diversified away by investing in both Applied Blockchain and 502413BE6 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 502413BE6 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Blockchain and L3 TECHNOLOGIES INC, you can compare the effects of market volatilities on Applied Blockchain and 502413BE6 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 502413BE6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Blockchain and 502413BE6.

Diversification Opportunities for Applied Blockchain and 502413BE6

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Applied and 502413BE6 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and L3 TECHNOLOGIES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3 TECHNOLOGIES INC 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 502413BE6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3 TECHNOLOGIES INC has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and 502413BE6 go up and down completely randomly.

Pair Corralation between Applied Blockchain and 502413BE6

Given the investment horizon of 90 days Applied Blockchain is expected to generate 4.11 times more return on investment than 502413BE6. However, Applied Blockchain is 4.11 times more volatile than L3 TECHNOLOGIES INC. It trades about 0.23 of its potential returns per unit of risk. L3 TECHNOLOGIES INC is currently generating about -0.12 per unit of risk. If you would invest  717.00  in Applied Blockchain on September 14, 2024 and sell it today you would earn a total of  231.00  from holding Applied Blockchain or generate 32.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy33.33%
ValuesDaily Returns

Applied Blockchain  vs.  L3 TECHNOLOGIES INC

 Performance 
       Timeline  
Applied Blockchain 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.
L3 TECHNOLOGIES INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days L3 TECHNOLOGIES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for L3 TECHNOLOGIES INC investors.

Applied Blockchain and 502413BE6 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Applied Blockchain and 502413BE6

The main advantage of trading using opposite Applied Blockchain and 502413BE6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Blockchain position performs unexpectedly, 502413BE6 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 502413BE6 will offset losses from the drop in 502413BE6's long position.
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The idea behind Applied Blockchain and L3 TECHNOLOGIES INC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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