Correlation Between Xai and Kusama
Can any of the company-specific risk be diversified away by investing in both Xai and Kusama 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 Xai and Kusama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xai and Kusama, you can compare the effects of market volatilities on Xai and Kusama 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 Xai with a short position of Kusama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xai and Kusama.
Diversification Opportunities for Xai and Kusama
Poor diversification
The 3 months correlation between Xai and Kusama is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Xai and Kusama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kusama and Xai 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 Xai are associated (or correlated) with Kusama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kusama has no effect on the direction of Xai i.e., Xai and Kusama go up and down completely randomly.
Pair Corralation between Xai and Kusama
Assuming the 90 days trading horizon Xai is expected to under-perform the Kusama. But the crypto coin apears to be less risky and, when comparing its historical volatility, Xai is 1.5 times less risky than Kusama. The crypto coin trades about -0.06 of its potential returns per unit of risk. The Kusama is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,178 in Kusama on November 9, 2024 and sell it today you would lose (307.00) from holding Kusama or give up 14.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xai vs. Kusama
Performance |
| Timeline |
| Xai |
| Kusama |
Xai and Kusama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xai and Kusama
The main advantage of trading using opposite Xai and Kusama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xai position performs unexpectedly, Kusama 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 Kusama will offset losses from the drop in Kusama's long position.The idea behind Xai and Kusama 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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