Correlation Between EOSDAC and CTXC

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

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

Diversification Opportunities for EOSDAC and CTXC

0.76

Correlation Coefficient

EOSDAC  CTXC

Poor diversification

The 3 months correlation between EOSDAC and CTXC is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding EOSDAC and CTXC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTXC and EOSDAC 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 EOSDAC are associated (or correlated) with CTXC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTXC has no effect on the direction of EOSDAC i.e., EOSDAC and CTXC go up and down completely randomly.

Pair Corralation between EOSDAC and CTXC

Assuming the 90 days trading horizon EOSDAC is expected to generate 0.51 times more return on investment than CTXC. However, EOSDAC is 1.96 times less risky than CTXC. It trades about -0.05 of its potential returns per unit of risk. CTXC is currently generating about -0.08 per unit of risk. If you would invest  0.04  in EOSDAC on December 2, 2024 and sell it today you would lose (0.01) from holding EOSDAC or give up 32.32% of portfolio value over 90 days.

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

EOSDAC  vs.  CTXC

EOSDAC

Risk-Adjusted Performance

Very Weak

Over the last 90 days EOSDAC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for EOSDAC investors.

CTXC

Risk-Adjusted Performance

Very Weak

Over the last 90 days CTXC 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 CTXC shareholders.

Pair Trading with EOSDAC and CTXC

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

The idea behind EOSDAC and CTXC 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.