Correlation Between LBA and Tokocrypto
Can any of the company-specific risk be diversified away by investing in both LBA 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 LBA and Tokocrypto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LBA and Tokocrypto, you can compare the effects of market volatilities on LBA 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 LBA with a short position of Tokocrypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBA and Tokocrypto.
Diversification Opportunities for LBA and Tokocrypto
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LBA and Tokocrypto is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding LBA and Tokocrypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokocrypto and LBA 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 LBA 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 LBA i.e., LBA and Tokocrypto go up and down completely randomly.
Pair Corralation between LBA and Tokocrypto
Assuming the 90 days trading horizon LBA is expected to generate 2.24 times more return on investment than Tokocrypto. However, LBA is 2.24 times more volatile than Tokocrypto. It trades about 0.05 of its potential returns per unit of risk. Tokocrypto is currently generating about 0.02 per unit of risk. If you would invest 0.02 in LBA on August 23, 2024 and sell it today you would lose 0.00 from holding LBA or give up 6.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LBA vs. Tokocrypto
Performance |
| Timeline |
| LBA |
| Tokocrypto |
LBA and Tokocrypto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBA and Tokocrypto
The main advantage of trading using opposite LBA and Tokocrypto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBA 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 LBA 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |