Correlation Between Chia and SOS
Can any of the company-specific risk be diversified away by investing in both Chia and SOS 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 Chia and SOS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia and SOS LTD A, you can compare the effects of market volatilities on Chia and SOS 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 Chia with a short position of SOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and SOS.
Diversification Opportunities for Chia and SOS
Very good diversification
The 3 months correlation between Chia and SOS is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chia and SOS LTD A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOS LTD A and Chia 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 Chia are associated (or correlated) with SOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOS LTD A has no effect on the direction of Chia i.e., Chia and SOS go up and down completely randomly.
Pair Corralation between Chia and SOS
Assuming the 90 days trading horizon Chia is expected to generate 1.67 times more return on investment than SOS. However, Chia is 1.67 times more volatile than SOS LTD A. It trades about 0.09 of its potential returns per unit of risk. SOS LTD A is currently generating about 0.1 per unit of risk. If you would invest 2,168 in Chia on October 20, 2024 and sell it today you would earn a total of 217.00 from holding Chia or generate 10.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.73% |
| Values | Daily Returns |
Chia vs. SOS LTD A
Performance |
| Timeline |
| Chia |
| SOS LTD A |
Chia and SOS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia and SOS
The main advantage of trading using opposite Chia and SOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia position performs unexpectedly, SOS 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 SOS will offset losses from the drop in SOS's long position.The idea behind Chia and SOS LTD A 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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