Correlation Between Binance Coin and DeNA Co

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

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

Diversification Opportunities for Binance Coin and DeNA Co

-0.31

Correlation Coefficient

Binance Coin  DeNA Co

Very good diversification

The 3 months correlation between Binance and DeNA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and DeNA Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeNA Co and Binance Coin 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 Binance Coin are associated (or correlated) with DeNA Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeNA Co has no effect on the direction of Binance Coin i.e., Binance Coin and DeNA Co go up and down completely randomly.

Pair Corralation between Binance Coin and DeNA Co

Assuming the 90 days trading horizon Binance Coin is expected to under-perform the DeNA Co. But the crypto coin apears to be less risky and, when comparing its historical volatility, Binance Coin is 2.15 times less risky than DeNA Co. The crypto coin trades about -0.02 of its potential returns per unit of risk. The DeNA Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,675  in DeNA Co on December 20, 2024 and sell it today you would earn a total of  787.00  from holding DeNA Co or generate 46.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

Binance Coin  vs.  DeNA Co

Binance Coin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Binance Coin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Binance Coin is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

DeNA Co

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DeNA Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, DeNA Co reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Binance Coin and DeNA Co

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

The idea behind Binance Coin and DeNA Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.