Correlation Between Aptos and TRON

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

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

Diversification Opportunities for Aptos and TRON

0.51

Correlation Coefficient

Aptos  TRON

Very weak diversification

The 3 months correlation between Aptos and TRON is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aptos and TRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRON and Aptos 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 Aptos are associated (or correlated) with TRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRON has no effect on the direction of Aptos i.e., Aptos and TRON go up and down completely randomly.

Pair Corralation between Aptos and TRON

Assuming the 90 days trading horizon Aptos is expected to under-perform the TRON. But the crypto coin apears to be less risky and, when comparing its historical volatility, Aptos is 2.61 times less risky than TRON. The crypto coin trades about -0.2 of its potential returns per unit of risk. The TRON is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  20.00  in TRON on November 28, 2024 and sell it today you would earn a total of  3.00  from holding TRON or generate 15.0% return on investment over 90 days.

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

Aptos  vs.  TRON

Aptos

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aptos 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 basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for Aptos shareholders.

TRON

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptos and TRON

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

The idea behind Aptos and TRON 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.