Correlation Between Digital China and Crypto
Can any of the company-specific risk be diversified away by investing in both Digital China and Crypto 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 Digital China and Crypto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital China Holdings and Crypto Co, you can compare the effects of market volatilities on Digital China and Crypto 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 Digital China with a short position of Crypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital China and Crypto.
Diversification Opportunities for Digital China and Crypto
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Digital and Crypto is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Digital China Holdings and Crypto Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crypto and Digital China 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 Digital China Holdings are associated (or correlated) with Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crypto has no effect on the direction of Digital China i.e., Digital China and Crypto go up and down completely randomly.
Pair Corralation between Digital China and Crypto
Assuming the 90 days horizon Digital China is expected to generate 123.28 times less return on investment than Crypto. But when comparing it to its historical volatility, Digital China Holdings is 4.03 times less risky than Crypto. It trades about 0.0 of its potential returns per unit of risk. Crypto Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.10 in Crypto Co on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Crypto Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital China Holdings vs. Crypto Co
Performance |
| Timeline |
| Digital China Holdings |
| Crypto |
Digital China and Crypto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital China and Crypto
The main advantage of trading using opposite Digital China and Crypto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital China position performs unexpectedly, Crypto 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 Crypto will offset losses from the drop in Crypto's long position.| Digital China vs. Crypto Co | Digital China vs. Global Develpmts | Digital China vs. Parsons Corp | Digital China vs. GBT Technologies |
| Crypto vs. Global Develpmts | Crypto vs. Parsons Corp | Crypto vs. GBT Technologies | Crypto vs. Appen Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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