Correlation Between NAS and Tokocrypto
Can any of the company-specific risk be diversified away by investing in both NAS 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 NAS and Tokocrypto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NAS and Tokocrypto, you can compare the effects of market volatilities on NAS 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 NAS with a short position of Tokocrypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAS and Tokocrypto.
Diversification Opportunities for NAS and Tokocrypto
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between NAS and Tokocrypto is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding NAS and Tokocrypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokocrypto and NAS 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 NAS 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 NAS i.e., NAS and Tokocrypto go up and down completely randomly.
Pair Corralation between NAS and Tokocrypto
Assuming the 90 days trading horizon NAS is expected to under-perform the Tokocrypto. In addition to that, NAS is 1.24 times more volatile than Tokocrypto. It trades about -0.01 of its total potential returns per unit of risk. Tokocrypto is currently generating about 0.06 per unit of volatility. If you would invest 26.00 in Tokocrypto on August 31, 2024 and sell it today you would earn a total of 13.00 from holding Tokocrypto or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NAS vs. Tokocrypto
Performance |
| Timeline |
| NAS |
| Tokocrypto |
NAS and Tokocrypto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAS and Tokocrypto
The main advantage of trading using opposite NAS and Tokocrypto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAS 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 NAS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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