Correlation Between HPB and Tezos
Can any of the company-specific risk be diversified away by investing in both HPB and Tezos 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 HPB and Tezos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HPB and Tezos, you can compare the effects of market volatilities on HPB and Tezos 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 HPB with a short position of Tezos. Check out your portfolio center. Please also check ongoing floating volatility patterns of HPB and Tezos.
Diversification Opportunities for HPB and Tezos
Weak diversification
The 3 months correlation between HPB and Tezos is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding HPB and Tezos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tezos and HPB 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 HPB are associated (or correlated) with Tezos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tezos has no effect on the direction of HPB i.e., HPB and Tezos go up and down completely randomly.
Pair Corralation between HPB and Tezos
Assuming the 90 days trading horizon HPB is expected to under-perform the Tezos. But the crypto coin apears to be less risky and, when comparing its historical volatility, HPB is 1.05 times less risky than Tezos. The crypto coin trades about -0.07 of its potential returns per unit of risk. The Tezos is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 66.00 in Tezos on August 30, 2024 and sell it today you would earn a total of 61.00 from holding Tezos or generate 92.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HPB vs. Tezos
Performance |
| Timeline |
| HPB |
| Tezos |
HPB and Tezos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HPB and Tezos
The main advantage of trading using opposite HPB and Tezos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HPB position performs unexpectedly, Tezos 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 Tezos will offset losses from the drop in Tezos' long position.The idea behind HPB and Tezos 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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