Correlation Between Chia and Danimer Scientific
Can any of the company-specific risk be diversified away by investing in both Chia and Danimer Scientific 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 Danimer Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia and Danimer Scientific, you can compare the effects of market volatilities on Chia and Danimer Scientific 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 Danimer Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and Danimer Scientific.
Diversification Opportunities for Chia and Danimer Scientific
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chia and Danimer is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Danimer Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danimer Scientific 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 Danimer Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danimer Scientific has no effect on the direction of Chia i.e., Chia and Danimer Scientific go up and down completely randomly.
Pair Corralation between Chia and Danimer Scientific
Assuming the 90 days trading horizon Chia is expected to generate 0.75 times more return on investment than Danimer Scientific. However, Chia is 1.33 times less risky than Danimer Scientific. It trades about 0.07 of its potential returns per unit of risk. Danimer Scientific is currently generating about -0.21 per unit of risk. If you would invest 1,309 in Chia on November 1, 2024 and sell it today you would earn a total of 392.00 from holding Chia or generate 29.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.65% |
| Values | Daily Returns |
Chia vs. Danimer Scientific
Performance |
| Timeline |
| Chia |
| Danimer Scientific |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chia and Danimer Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia and Danimer Scientific
The main advantage of trading using opposite Chia and Danimer Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia position performs unexpectedly, Danimer Scientific 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 Danimer Scientific will offset losses from the drop in Danimer Scientific's long position.The idea behind Chia and Danimer Scientific 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.| Danimer Scientific vs. LyondellBasell Industries NV | Danimer Scientific vs. International Flavors Fragrances | Danimer Scientific vs. Cabot | Danimer Scientific vs. Westlake Chemical |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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