Correlation Between Ethereum and Shenzhen Hans

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

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

Diversification Opportunities for Ethereum and Shenzhen Hans

0.5

Correlation Coefficient

Ethereum  Shenzhen Hans

Very weak diversification

The 3 months correlation between Ethereum and Shenzhen is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Shenzhen Hans CNC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Hans CNC and Ethereum 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 Ethereum are associated (or correlated) with Shenzhen Hans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Hans CNC has no effect on the direction of Ethereum i.e., Ethereum and Shenzhen Hans go up and down completely randomly.

Pair Corralation between Ethereum and Shenzhen Hans

Assuming the 90 days trading horizon Ethereum is expected to generate 1.36 times more return on investment than Shenzhen Hans. However, Ethereum is 1.36 times more volatile than Shenzhen Hans CNC. It trades about 0.15 of its potential returns per unit of risk. Shenzhen Hans CNC is currently generating about -0.01 per unit of risk. If you would invest  243,903  in Ethereum on October 10, 2024 and sell it today you would earn a total of  97,337  from holding Ethereum or generate 39.91% return on investment over 90 days.

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

Ethereum  vs.  Shenzhen Hans CNC

Ethereum

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Hans CNC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Hans CNC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shenzhen Hans is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ethereum and Shenzhen Hans

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

The idea behind Ethereum and Shenzhen Hans CNC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.