Correlation Between KIN and Memecoin
Can any of the company-specific risk be diversified away by investing in both KIN and Memecoin 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 KIN and Memecoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIN and Memecoin, you can compare the effects of market volatilities on KIN and Memecoin 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 KIN with a short position of Memecoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIN and Memecoin.
Diversification Opportunities for KIN and Memecoin
Excellent diversification
The 3 months correlation between KIN and Memecoin is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding KIN and Memecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Memecoin and KIN 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 KIN are associated (or correlated) with Memecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Memecoin has no effect on the direction of KIN i.e., KIN and Memecoin go up and down completely randomly.
Pair Corralation between KIN and Memecoin
Assuming the 90 days trading horizon KIN is expected to under-perform the Memecoin. But the crypto coin apears to be less risky and, when comparing its historical volatility, KIN is 1.1 times less risky than Memecoin. The crypto coin trades about -0.01 of its potential returns per unit of risk. The Memecoin is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2.43 in Memecoin on September 3, 2024 and sell it today you would lose (0.82) from holding Memecoin or give up 33.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.72% |
| Values | Daily Returns |
KIN vs. Memecoin
Performance |
| Timeline |
| KIN |
| Memecoin |
KIN and Memecoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIN and Memecoin
The main advantage of trading using opposite KIN and Memecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIN position performs unexpectedly, Memecoin 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 Memecoin will offset losses from the drop in Memecoin's long position.The idea behind KIN and Memecoin 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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