Correlation Between XRP and Hirata
Can any of the company-specific risk be diversified away by investing in both XRP and Hirata 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 XRP and Hirata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XRP and Hirata, you can compare the effects of market volatilities on XRP and Hirata 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 XRP with a short position of Hirata. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and Hirata.
Diversification Opportunities for XRP and Hirata
Very poor diversification
The 3 months correlation between XRP and Hirata is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Hirata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hirata and XRP 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 XRP are associated (or correlated) with Hirata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hirata has no effect on the direction of XRP i.e., XRP and Hirata go up and down completely randomly.
Pair Corralation between XRP and Hirata
Assuming the 90 days trading horizon XRP is expected to generate 4.47 times more return on investment than Hirata. However, XRP is 4.47 times more volatile than Hirata. It trades about 0.25 of its potential returns per unit of risk. Hirata is currently generating about 0.01 per unit of risk. If you would invest 245.00 in XRP on November 2, 2024 and sell it today you would earn a total of 68.00 from holding XRP or generate 27.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
XRP vs. Hirata
Performance |
| Timeline |
| XRP |
| Hirata |
XRP and Hirata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XRP and Hirata
The main advantage of trading using opposite XRP and Hirata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Hirata 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 Hirata will offset losses from the drop in Hirata's long position.The idea behind XRP and Hirata 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.| Hirata vs. Fevertree Drinks PLC | Hirata vs. Fuji Media Holdings | Hirata vs. Universal Entertainment | Hirata vs. SAN MIGUEL BREWERY |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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