Correlation Between BLZ and ADB

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

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

Diversification Opportunities for BLZ and ADB

0.09

Correlation Coefficient

BLZ  ADB

Significant diversification

The 3 months correlation between BLZ and ADB is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and ADB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADB and BLZ 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 BLZ are associated (or correlated) with ADB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADB has no effect on the direction of BLZ i.e., BLZ and ADB go up and down completely randomly.

Pair Corralation between BLZ and ADB

Assuming the 90 days trading horizon BLZ is expected to under-perform the ADB. In addition to that, BLZ is 4.06 times more volatile than ADB. It trades about -0.48 of its total potential returns per unit of risk. ADB is currently generating about -0.02 per unit of volatility. If you would invest  0.03  in ADB on October 7, 2024 and sell it today you would lose  0.00  from holding ADB or give up 1.67% of portfolio value over 90 days.

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

BLZ  vs.  ADB

BLZ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BLZ 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 February 2025. The latest tumult may also be a sign of longer-term up-swing for BLZ shareholders.

ADB

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ADB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, ADB exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BLZ and ADB

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

The idea behind BLZ and ADB 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.