Correlation Between Algorand and Maj Invest

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

By analyzing existing cross correlation between Algorand and Maj Invest UCITS, you can compare the effects of market volatilities on Algorand and Maj Invest 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 Maj Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algorand and Maj Invest.

Diversification Opportunities for Algorand and Maj Invest

0.26

Correlation Coefficient

Algorand  Maj Invest

Modest diversification

The 3 months correlation between Algorand and Maj is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and Maj Invest UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maj Invest UCITS 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 Maj Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maj Invest UCITS has no effect on the direction of Algorand i.e., Algorand and Maj Invest go up and down completely randomly.

Pair Corralation between Algorand and Maj Invest

Assuming the 90 days trading horizon Algorand is expected to generate 8.47 times more return on investment than Maj Invest. However, Algorand is 8.47 times more volatile than Maj Invest UCITS. It trades about 0.26 of its potential returns per unit of risk. Maj Invest UCITS is currently generating about 0.07 per unit of risk. If you would invest  11.00  in Algorand on October 25, 2024 and sell it today you would earn a total of  29.00  from holding Algorand or generate 263.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Algorand  vs.  Maj Invest UCITS

Algorand

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Algorand are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Algorand exhibited solid returns over the last few months and may actually be approaching a breakup point.

Maj Invest UCITS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest UCITS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking indicators, Maj Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Algorand and Maj Invest

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

The idea behind Algorand and Maj Invest UCITS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.