Correlation Between Tokocrypto and LUN
Can any of the company-specific risk be diversified away by investing in both Tokocrypto and LUN 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 Tokocrypto and LUN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokocrypto and LUN, you can compare the effects of market volatilities on Tokocrypto and LUN 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 Tokocrypto with a short position of LUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokocrypto and LUN.
Diversification Opportunities for Tokocrypto and LUN
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tokocrypto and LUN is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Tokocrypto and LUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUN and Tokocrypto 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 Tokocrypto are associated (or correlated) with LUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUN has no effect on the direction of Tokocrypto i.e., Tokocrypto and LUN go up and down completely randomly.
Pair Corralation between Tokocrypto and LUN
Assuming the 90 days trading horizon Tokocrypto is expected to generate 2.59 times less return on investment than LUN. In addition to that, Tokocrypto is 1.06 times more volatile than LUN. It trades about 0.13 of its total potential returns per unit of risk. LUN is currently generating about 0.37 per unit of volatility. 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 |
Tokocrypto vs. LUN
Performance |
| Timeline |
| Tokocrypto |
| LUN |
Tokocrypto and LUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokocrypto and LUN
The main advantage of trading using opposite Tokocrypto and LUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokocrypto position performs unexpectedly, LUN 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 LUN will offset losses from the drop in LUN's long position.The idea behind Tokocrypto and LUN 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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