Correlation Between DeFi Technologies and Neptune Digital

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

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

Diversification Opportunities for DeFi Technologies and Neptune Digital

0.34

Correlation Coefficient

DeFi Technologies  Neptune Digital

Weak diversification

The 3 months correlation between DeFi and Neptune is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding DeFi Technologies and Neptune Digital Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neptune Digital Assets and DeFi Technologies 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 DeFi Technologies are associated (or correlated) with Neptune Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neptune Digital Assets has no effect on the direction of DeFi Technologies i.e., DeFi Technologies and Neptune Digital go up and down completely randomly.

Pair Corralation between DeFi Technologies and Neptune Digital

Assuming the 90 days horizon DeFi Technologies is expected to generate 10.64 times less return on investment than Neptune Digital. But when comparing it to its historical volatility, DeFi Technologies is 1.53 times less risky than Neptune Digital. It trades about 0.02 of its potential returns per unit of risk. Neptune Digital Assets is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  70.00  in Neptune Digital Assets on December 29, 2024 and sell it today you would earn a total of  41.00  from holding Neptune Digital Assets or generate 58.57% return on investment over 90 days.

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

DeFi Technologies  vs.  Neptune Digital Assets

DeFi Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DeFi Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DeFi Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Neptune Digital Assets

Risk-Adjusted Performance

OK

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

Pair Trading with DeFi Technologies and Neptune Digital

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

The idea behind DeFi Technologies and Neptune Digital Assets 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.