Correlation Between NAV and Tokocrypto
Can any of the company-specific risk be diversified away by investing in both NAV 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 NAV and Tokocrypto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NAV and Tokocrypto, you can compare the effects of market volatilities on NAV 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 NAV with a short position of Tokocrypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAV and Tokocrypto.
Diversification Opportunities for NAV and Tokocrypto
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NAV and Tokocrypto is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NAV and Tokocrypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokocrypto and NAV 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 NAV 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 NAV i.e., NAV and Tokocrypto go up and down completely randomly.
Pair Corralation between NAV and Tokocrypto
Assuming the 90 days trading horizon NAV is expected to generate 4.24 times more return on investment than Tokocrypto. However, NAV is 4.24 times more volatile than Tokocrypto. It trades about 0.07 of its potential returns per unit of risk. Tokocrypto is currently generating about 0.01 per unit of risk. If you would invest 11.00 in NAV on August 27, 2024 and sell it today you would lose (8.16) from holding NAV or give up 74.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NAV vs. Tokocrypto
Performance |
| Timeline |
| NAV |
| Tokocrypto |
NAV and Tokocrypto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAV and Tokocrypto
The main advantage of trading using opposite NAV and Tokocrypto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAV 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 NAV 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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