Correlation Between CHR and Request Network

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

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

Diversification Opportunities for CHR and Request Network

0.61

Correlation Coefficient

CHR  Request Network

Poor diversification

The 3 months correlation between CHR and Request is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CHR and Request Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Request Network and CHR 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 CHR are associated (or correlated) with Request Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Request Network has no effect on the direction of CHR i.e., CHR and Request Network go up and down completely randomly.

Pair Corralation between CHR and Request Network

Assuming the 90 days trading horizon CHR is expected to under-perform the Request Network. In addition to that, CHR is 1.28 times more volatile than Request Network. It trades about -0.16 of its total potential returns per unit of risk. Request Network is currently generating about 0.03 per unit of volatility. If you would invest  13.00  in Request Network on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Request Network or generate 0.0% return on investment over 90 days.

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

CHR  vs.  Request Network

CHR

Risk-Adjusted Performance

Very Weak

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

Request Network

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Request Network are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Request Network may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CHR and Request Network

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

The idea behind CHR and Request Network 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 Transaction History module to view history of all your transactions and understand their impact on performance.