Correlation Between CHR and Threshold Network

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

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

Diversification Opportunities for CHR and Threshold Network

0.95

Correlation Coefficient

CHR  Threshold Network

Almost no diversification

The 3 months correlation between CHR and Threshold is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CHR and Threshold Network Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Threshold Network Token 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 Threshold Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Threshold Network Token has no effect on the direction of CHR i.e., CHR and Threshold Network go up and down completely randomly.

Pair Corralation between CHR and Threshold Network

Assuming the 90 days trading horizon CHR is expected to under-perform the Threshold Network. In addition to that, CHR is 1.49 times more volatile than Threshold Network Token. It trades about -0.17 of its total potential returns per unit of risk. Threshold Network Token is currently generating about -0.17 per unit of volatility. If you would invest  2.68  in Threshold Network Token on December 30, 2024 and sell it today you would lose (1.15) from holding Threshold Network Token or give up 42.91% of portfolio value over 90 days.

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

CHR  vs.  Threshold Network Token

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.

Threshold Network Token

Risk-Adjusted Performance

Very Weak

Over the last 90 days Threshold Network Token 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 Threshold Network Token shareholders.

Pair Trading with CHR and Threshold Network

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

The idea behind CHR and Threshold Network Token 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.