Correlation Between Near and OKT Chain
Can any of the company-specific risk be diversified away by investing in both Near and OKT Chain 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 Near and OKT Chain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Near and OKT Chain, you can compare the effects of market volatilities on Near and OKT Chain 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 Near with a short position of OKT Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Near and OKT Chain.
Diversification Opportunities for Near and OKT Chain
Very poor diversification
The 3 months correlation between Near and OKT is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Near and OKT Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OKT Chain and Near 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 Near are associated (or correlated) with OKT Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OKT Chain has no effect on the direction of Near i.e., Near and OKT Chain go up and down completely randomly.
Pair Corralation between Near and OKT Chain
Assuming the 90 days trading horizon Near is expected to under-perform the OKT Chain. But the crypto coin apears to be less risky and, when comparing its historical volatility, Near is 1.26 times less risky than OKT Chain. The crypto coin trades about -0.01 of its potential returns per unit of risk. The OKT Chain is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,405 in OKT Chain on August 27, 2024 and sell it today you would lose (158.00) from holding OKT Chain or give up 11.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Near vs. OKT Chain
Performance |
| Timeline |
| Near |
| OKT Chain |
Near and OKT Chain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Near and OKT Chain
The main advantage of trading using opposite Near and OKT Chain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Near position performs unexpectedly, OKT Chain 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 OKT Chain will offset losses from the drop in OKT Chain's long position.The idea behind Near and OKT Chain 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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