Correlation Between Injective and Loopring

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

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

Diversification Opportunities for Injective and Loopring

0.86

Correlation Coefficient

Injective  Loopring

Very poor diversification

The 3 months correlation between Injective and Loopring is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Injective and Loopring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loopring and Injective 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 Injective are associated (or correlated) with Loopring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loopring has no effect on the direction of Injective i.e., Injective and Loopring go up and down completely randomly.

Pair Corralation between Injective and Loopring

Assuming the 90 days trading horizon Injective is expected to generate 1.08 times less return on investment than Loopring. In addition to that, Injective is 1.14 times more volatile than Loopring. It trades about 0.18 of its total potential returns per unit of risk. Loopring is currently generating about 0.22 per unit of volatility. If you would invest  13.00  in Loopring on August 30, 2024 and sell it today you would earn a total of  11.00  from holding Loopring or generate 84.62% return on investment over 90 days.

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

Injective  vs.  Loopring

Injective

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Injective are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking indicators, Injective exhibited solid returns over the last few months and may actually be approaching a breakup point.

Loopring

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Loopring are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Loopring exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Injective and Loopring

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

The idea behind Injective and Loopring 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.