Correlation Between BounceBit and Altlayer
Can any of the company-specific risk be diversified away by investing in both BounceBit and Altlayer 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 BounceBit and Altlayer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BounceBit and Altlayer, you can compare the effects of market volatilities on BounceBit and Altlayer 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 BounceBit with a short position of Altlayer. Check out your portfolio center. Please also check ongoing floating volatility patterns of BounceBit and Altlayer.
Diversification Opportunities for BounceBit and Altlayer
Very poor diversification
The 3 months correlation between BounceBit and Altlayer is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding BounceBit and Altlayer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altlayer and BounceBit 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 BounceBit are associated (or correlated) with Altlayer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altlayer has no effect on the direction of BounceBit i.e., BounceBit and Altlayer go up and down completely randomly.
Pair Corralation between BounceBit and Altlayer
Assuming the 90 days horizon BounceBit is expected to under-perform the Altlayer. But the crypto coin apears to be less risky and, when comparing its historical volatility, BounceBit is 1.18 times less risky than Altlayer. The crypto coin trades about -0.46 of its potential returns per unit of risk. The Altlayer is currently generating about -0.38 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Altlayer on November 8, 2024 and sell it today you would lose (5.97) from holding Altlayer or give up 54.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BounceBit vs. Altlayer
Performance |
| Timeline |
| BounceBit |
| Altlayer |
BounceBit and Altlayer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BounceBit and Altlayer
The main advantage of trading using opposite BounceBit and Altlayer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BounceBit position performs unexpectedly, Altlayer 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 Altlayer will offset losses from the drop in Altlayer's long position.The idea behind BounceBit and Altlayer 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.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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