Correlation Between Chainlink and Aelf

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

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

Diversification Opportunities for Chainlink and Aelf

0.52

Correlation Coefficient

Chainlink  Aelf

Very weak diversification

The 3 months correlation between Chainlink and Aelf is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and aelf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aelf and Chainlink 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 Chainlink are associated (or correlated) with Aelf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of aelf has no effect on the direction of Chainlink i.e., Chainlink and Aelf go up and down completely randomly.

Pair Corralation between Chainlink and Aelf

Assuming the 90 days trading horizon Chainlink is expected to generate 1.51 times more return on investment than Aelf. However, Chainlink is 1.51 times more volatile than aelf. It trades about 0.0 of its potential returns per unit of risk. aelf is currently generating about -0.23 per unit of risk. If you would invest  1,826  in Chainlink on November 28, 2024 and sell it today you would lose (312.00) from holding Chainlink or give up 17.09% of portfolio value over 90 days.

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

Chainlink  vs.  aelf

Chainlink

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chainlink has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Chainlink is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

aelf

Risk-Adjusted Performance

Very Weak

Over the last 90 days aelf 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for aelf shareholders.

Pair Trading with Chainlink and Aelf

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

The idea behind Chainlink and aelf 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.