Correlation Between Applied Blockchain and Intuitive Machines

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

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

Diversification Opportunities for Applied Blockchain and Intuitive Machines

0.78

Correlation Coefficient

Applied Blockchain  Intuitive Machines

Poor diversification

The 3 months correlation between Applied and Intuitive is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and Intuitive Machines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Machines and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with Intuitive Machines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Machines has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and Intuitive Machines go up and down completely randomly.

Pair Corralation between Applied Blockchain and Intuitive Machines

Given the investment horizon of 90 days Applied Blockchain is expected to generate 1.57 times less return on investment than Intuitive Machines. But when comparing it to its historical volatility, Applied Blockchain is 1.4 times less risky than Intuitive Machines. It trades about 0.15 of its potential returns per unit of risk. Intuitive Machines is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  572.00  in Intuitive Machines on September 14, 2024 and sell it today you would earn a total of  608.00  from holding Intuitive Machines or generate 106.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Applied Blockchain  vs.  Intuitive Machines

Applied Blockchain

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Intuitive Machines

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Intuitive Machines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Blockchain and Intuitive Machines

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

The idea behind Applied Blockchain and Intuitive Machines 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.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.