Correlation Between Alchemy Pay and Maker

Can any of the company-specific risk be diversified away by investing in both Alchemy Pay and Maker 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 Alchemy Pay and Maker into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alchemy Pay and Maker, you can compare the effects of market volatilities on Alchemy Pay and Maker 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 Alchemy Pay with a short position of Maker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alchemy Pay and Maker.

Diversification Opportunities for Alchemy Pay and Maker

-0.24

Correlation Coefficient

Alchemy Pay  Maker

Very good diversification

The 3 months correlation between Alchemy and Maker is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alchemy Pay and Maker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maker and Alchemy Pay 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 Alchemy Pay are associated (or correlated) with Maker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maker has no effect on the direction of Alchemy Pay i.e., Alchemy Pay and Maker go up and down completely randomly.

Pair Corralation between Alchemy Pay and Maker

Assuming the 90 days trading horizon Alchemy Pay is expected to generate 1.85 times more return on investment than Maker. However, Alchemy Pay is 1.85 times more volatile than Maker. It trades about 0.03 of its potential returns per unit of risk. Maker is currently generating about 0.0 per unit of risk. If you would invest  2.55  in Alchemy Pay on December 30, 2024 and sell it today you would lose (0.38) from holding Alchemy Pay or give up 14.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alchemy Pay  vs.  Maker

Alchemy Pay

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alchemy Pay are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Alchemy Pay exhibited solid returns over the last few months and may actually be approaching a breakup point.

Maker

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Maker is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alchemy Pay and Maker

The main advantage of trading using opposite Alchemy Pay and Maker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alchemy Pay position performs unexpectedly, Maker 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 Maker will offset losses from the drop in Maker's long position.

The idea behind Alchemy Pay and Maker 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.