Correlation Between LUN and Tokocrypto
Can any of the company-specific risk be diversified away by investing in both LUN 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 LUN and Tokocrypto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LUN and Tokocrypto, you can compare the effects of market volatilities on LUN 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 LUN with a short position of Tokocrypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of LUN and Tokocrypto.
Diversification Opportunities for LUN and Tokocrypto
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between LUN and Tokocrypto is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding LUN and Tokocrypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokocrypto and LUN 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 LUN 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 LUN i.e., LUN and Tokocrypto go up and down completely randomly.
Pair Corralation between LUN and Tokocrypto
Assuming the 90 days trading horizon LUN is expected to generate 0.94 times more return on investment than Tokocrypto. However, LUN is 1.06 times less risky than Tokocrypto. It trades about 0.37 of its potential returns per unit of risk. Tokocrypto is currently generating about 0.13 per unit of risk. If you would invest 1.47 in LUN on August 31, 2024 and sell it today you would earn a total of 0.56 from holding LUN or generate 38.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LUN vs. Tokocrypto
Performance |
| Timeline |
| LUN |
| Tokocrypto |
LUN and Tokocrypto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LUN and Tokocrypto
The main advantage of trading using opposite LUN and Tokocrypto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LUN 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 LUN 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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