Correlation Between Binance Coin and Wah Lee
Can any of the company-specific risk be diversified away by investing in both Binance Coin and Wah Lee 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 Binance Coin and Wah Lee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and Wah Lee Industrial, you can compare the effects of market volatilities on Binance Coin and Wah Lee 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 Binance Coin with a short position of Wah Lee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and Wah Lee.
Diversification Opportunities for Binance Coin and Wah Lee
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Binance and Wah is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Wah Lee Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Lee Industrial and Binance Coin 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 Binance Coin are associated (or correlated) with Wah Lee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Lee Industrial has no effect on the direction of Binance Coin i.e., Binance Coin and Wah Lee go up and down completely randomly.
Pair Corralation between Binance Coin and Wah Lee
Assuming the 90 days trading horizon Binance Coin is expected to generate 5.15 times more return on investment than Wah Lee. However, Binance Coin is 5.15 times more volatile than Wah Lee Industrial. It trades about 0.06 of its potential returns per unit of risk. Wah Lee Industrial is currently generating about 0.04 per unit of risk. If you would invest 29,623 in Binance Coin on November 2, 2024 and sell it today you would earn a total of 38,193 from holding Binance Coin or generate 128.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 61.83% |
| Values | Daily Returns |
Binance Coin vs. Wah Lee Industrial
Performance |
| Timeline |
| Binance Coin |
| Wah Lee Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Binance Coin and Wah Lee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binance Coin and Wah Lee
The main advantage of trading using opposite Binance Coin and Wah Lee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, Wah Lee 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 Wah Lee will offset losses from the drop in Wah Lee's long position.| Binance Coin vs. Staked Ether | Binance Coin vs. Cronos | Binance Coin vs. Wrapped Bitcoin | Binance Coin vs. Monero |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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