Correlation Between Toncoin and UPP
Can any of the company-specific risk be diversified away by investing in both Toncoin and UPP 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 UPP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toncoin and UPP, you can compare the effects of market volatilities on Toncoin and UPP 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 UPP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toncoin and UPP.
Diversification Opportunities for Toncoin and UPP
Very weak diversification
The 3 months correlation between Toncoin and UPP is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Toncoin and UPP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPP 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 UPP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPP has no effect on the direction of Toncoin i.e., Toncoin and UPP go up and down completely randomly.
Pair Corralation between Toncoin and UPP
Assuming the 90 days trading horizon Toncoin is expected to generate 1.45 times less return on investment than UPP. But when comparing it to its historical volatility, Toncoin is 2.22 times less risky than UPP. It trades about 0.08 of its potential returns per unit of risk. UPP is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8.25 in UPP on September 12, 2024 and sell it today you would earn a total of 0.66 from holding UPP or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 46.5% |
| Values | Daily Returns |
Toncoin vs. UPP
Performance |
| Timeline |
| Toncoin |
| UPP |
Toncoin and UPP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toncoin and UPP
The main advantage of trading using opposite Toncoin and UPP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toncoin position performs unexpectedly, UPP 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 UPP will offset losses from the drop in UPP's long position.The idea behind Toncoin and UPP 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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