Correlation Between Metalpha Technology and Tinybeans Group

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

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

Diversification Opportunities for Metalpha Technology and Tinybeans Group

0.34

Correlation Coefficient

Metalpha Technology  Tinybeans Group

Weak diversification

The 3 months correlation between Metalpha and Tinybeans is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Metalpha Technology Holding and Tinybeans Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinybeans Group and Metalpha Technology 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 Metalpha Technology Holding are associated (or correlated) with Tinybeans Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinybeans Group has no effect on the direction of Metalpha Technology i.e., Metalpha Technology and Tinybeans Group go up and down completely randomly.

Pair Corralation between Metalpha Technology and Tinybeans Group

Given the investment horizon of 90 days Metalpha Technology Holding is expected to under-perform the Tinybeans Group. But the etf apears to be less risky and, when comparing its historical volatility, Metalpha Technology Holding is 10.54 times less risky than Tinybeans Group. The etf trades about -0.02 of its potential returns per unit of risk. The Tinybeans Group Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Tinybeans Group Limited on September 12, 2024 and sell it today you would lose (0.50) from holding Tinybeans Group Limited or give up 50.0% of portfolio value over 90 days.

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

Metalpha Technology Holding  vs.  Tinybeans Group Limited

Metalpha Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalpha Technology Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Metalpha Technology is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Tinybeans Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tinybeans Group Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tinybeans Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalpha Technology and Tinybeans Group

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

The idea behind Metalpha Technology Holding and Tinybeans Group Limited 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.