Correlation Between Loopring and Tezos

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

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

Diversification Opportunities for Loopring and Tezos

0.92

Correlation Coefficient

Loopring  Tezos

Almost no diversification

The 3 months correlation between Loopring and Tezos is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Loopring and Tezos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tezos and Loopring 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 Loopring are associated (or correlated) with Tezos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tezos has no effect on the direction of Loopring i.e., Loopring and Tezos go up and down completely randomly.

Pair Corralation between Loopring and Tezos

Assuming the 90 days trading horizon Loopring is expected to generate 1.15 times more return on investment than Tezos. However, Loopring is 1.15 times more volatile than Tezos. It trades about -0.01 of its potential returns per unit of risk. Tezos is currently generating about -0.01 per unit of risk. If you would invest  17.00  in Loopring on November 19, 2024 and sell it today you would lose (3.00) from holding Loopring or give up 17.65% of portfolio value over 90 days.

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

Loopring  vs.  Tezos

Loopring

Risk-Adjusted Performance

Very Weak

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

Tezos

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Loopring and Tezos

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

The idea behind Loopring and Tezos 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.