Correlation Between Avalanche and Zilliqa

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

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

Diversification Opportunities for Avalanche and Zilliqa

0.96

Correlation Coefficient

Avalanche  Zilliqa

Almost no diversification

The 3 months correlation between Avalanche and Zilliqa is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and Zilliqa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zilliqa and Avalanche 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 Avalanche are associated (or correlated) with Zilliqa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zilliqa has no effect on the direction of Avalanche i.e., Avalanche and Zilliqa go up and down completely randomly.

Pair Corralation between Avalanche and Zilliqa

Assuming the 90 days trading horizon Avalanche is expected to generate 0.96 times more return on investment than Zilliqa. However, Avalanche is 1.04 times less risky than Zilliqa. It trades about -0.18 of its potential returns per unit of risk. Zilliqa is currently generating about -0.21 per unit of risk. If you would invest  5,095  in Avalanche on December 1, 2024 and sell it today you would lose (2,870) from holding Avalanche or give up 56.33% of portfolio value over 90 days.

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

Avalanche  vs.  Zilliqa

Avalanche

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avalanche 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 Avalanche shareholders.

Zilliqa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zilliqa 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 essential 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 Zilliqa shareholders.

Pair Trading with Avalanche and Zilliqa

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

The idea behind Avalanche and Zilliqa 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.