Correlation Between Toncoin and Ampleforth
Can any of the company-specific risk be diversified away by investing in both Toncoin and Ampleforth 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 Toncoin and Ampleforth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toncoin and Ampleforth, you can compare the effects of market volatilities on Toncoin and Ampleforth 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 Toncoin with a short position of Ampleforth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toncoin and Ampleforth.
Diversification Opportunities for Toncoin and Ampleforth
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Toncoin and Ampleforth is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Toncoin and Ampleforth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampleforth and Toncoin 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 Toncoin are associated (or correlated) with Ampleforth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampleforth has no effect on the direction of Toncoin i.e., Toncoin and Ampleforth go up and down completely randomly.
Pair Corralation between Toncoin and Ampleforth
Assuming the 90 days trading horizon Toncoin is expected to generate 0.71 times more return on investment than Ampleforth. However, Toncoin is 1.41 times less risky than Ampleforth. It trades about 0.16 of its potential returns per unit of risk. Ampleforth is currently generating about 0.1 per unit of risk. If you would invest 466.00 in Toncoin on September 3, 2024 and sell it today you would earn a total of 217.00 from holding Toncoin or generate 46.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toncoin vs. Ampleforth
Performance |
| Timeline |
| Toncoin |
| Ampleforth |
Toncoin and Ampleforth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toncoin and Ampleforth
The main advantage of trading using opposite Toncoin and Ampleforth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toncoin position performs unexpectedly, Ampleforth 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 Ampleforth will offset losses from the drop in Ampleforth's long position.The idea behind Toncoin and Ampleforth 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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