Correlation Between Arcane Crypto and SOS

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

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

Diversification Opportunities for Arcane Crypto and SOS

0.67

Correlation Coefficient

Arcane Crypto  SOS

Poor diversification

The 3 months correlation between Arcane and SOS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arcane Crypto AB and SOS Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOS Limited and Arcane Crypto 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 Arcane Crypto AB are associated (or correlated) with SOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOS Limited has no effect on the direction of Arcane Crypto i.e., Arcane Crypto and SOS go up and down completely randomly.

Pair Corralation between Arcane Crypto and SOS

Assuming the 90 days horizon Arcane Crypto AB is expected to under-perform the SOS. In addition to that, Arcane Crypto is 1.53 times more volatile than SOS Limited. It trades about -0.21 of its total potential returns per unit of risk. SOS Limited is currently generating about 0.02 per unit of volatility. If you would invest  779.00  in SOS Limited on September 23, 2024 and sell it today you would lose (69.00) from holding SOS Limited or give up 8.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Arcane Crypto AB  vs.  SOS Limited

Arcane Crypto AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcane Crypto AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SOS Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOS Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Arcane Crypto and SOS

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

The idea behind Arcane Crypto AB and SOS Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.