Correlation Between Ethereum and APL
Can any of the company-specific risk be diversified away by investing in both Ethereum and APL 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 Ethereum and APL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and APL, you can compare the effects of market volatilities on Ethereum and APL 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 Ethereum with a short position of APL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and APL.
Diversification Opportunities for Ethereum and APL
Very good diversification
The 3 months correlation between Ethereum and APL is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and APL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APL and Ethereum 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 Ethereum are associated (or correlated) with APL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APL has no effect on the direction of Ethereum i.e., Ethereum and APL go up and down completely randomly.
Pair Corralation between Ethereum and APL
Assuming the 90 days trading horizon Ethereum is expected to under-perform the APL. But the crypto coin apears to be less risky and, when comparing its historical volatility, Ethereum is 17.16 times less risky than APL. The crypto coin trades about 0.0 of its potential returns per unit of risk. The APL is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.00 in APL on August 27, 2024 and sell it today you would earn a total of 0.00 from holding APL or generate 45.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ethereum vs. APL
Performance |
| Timeline |
| Ethereum |
| APL |
Ethereum and APL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and APL
The main advantage of trading using opposite Ethereum and APL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, APL 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 APL will offset losses from the drop in APL's long position.The idea behind Ethereum and APL 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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