Correlation Between Gold Fields and Tokocrypto
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Tokocrypto 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 Gold Fields and Tokocrypto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldfinch and Tokocrypto, you can compare the effects of market volatilities on Gold Fields and Tokocrypto 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 Gold Fields with a short position of Tokocrypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Tokocrypto.
Diversification Opportunities for Gold Fields and Tokocrypto
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and Tokocrypto is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Goldfinch and Tokocrypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokocrypto and Gold Fields 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 Goldfinch are associated (or correlated) with Tokocrypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokocrypto has no effect on the direction of Gold Fields i.e., Gold Fields and Tokocrypto go up and down completely randomly.
Pair Corralation between Gold Fields and Tokocrypto
Assuming the 90 days trading horizon Gold Fields is expected to generate 2.81 times less return on investment than Tokocrypto. In addition to that, Gold Fields is 1.84 times more volatile than Tokocrypto. It trades about 0.01 of its total potential returns per unit of risk. Tokocrypto is currently generating about 0.05 per unit of volatility. If you would invest 35.00 in Tokocrypto on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Tokocrypto or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldfinch vs. Tokocrypto
Performance |
| Timeline |
| Gold Fields |
| Tokocrypto |
Gold Fields and Tokocrypto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Tokocrypto
The main advantage of trading using opposite Gold Fields and Tokocrypto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Tokocrypto 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 Tokocrypto will offset losses from the drop in Tokocrypto's long position.The idea behind Goldfinch and Tokocrypto 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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