Correlation Between Algorand and Shaanxi Lighte

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

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

Diversification Opportunities for Algorand and Shaanxi Lighte

-0.24

Correlation Coefficient

Algorand  Shaanxi Lighte

Very good diversification

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

Pair Corralation between Algorand and Shaanxi Lighte

Assuming the 90 days trading horizon Algorand is expected to under-perform the Shaanxi Lighte. In addition to that, Algorand is 2.8 times more volatile than Shaanxi Lighte Optoelectronics. It trades about -0.12 of its total potential returns per unit of risk. Shaanxi Lighte Optoelectronics is currently generating about -0.07 per unit of volatility. If you would invest  2,233  in Shaanxi Lighte Optoelectronics on December 25, 2024 and sell it today you would lose (213.00) from holding Shaanxi Lighte Optoelectronics or give up 9.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

Algorand  vs.  Shaanxi Lighte Optoelectronics

Algorand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Algorand has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Algorand shareholders.

Shaanxi Lighte Optoe

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shaanxi Lighte Optoelectronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Algorand and Shaanxi Lighte

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

The idea behind Algorand and Shaanxi Lighte Optoelectronics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.