Correlation Between Polygon and Aelf

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

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

Diversification Opportunities for Polygon and Aelf

0.94

Correlation Coefficient

Polygon  Aelf

Almost no diversification

The 3 months correlation between Polygon and Aelf is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Polygon and aelf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aelf and Polygon 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 Polygon 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 Polygon i.e., Polygon and Aelf go up and down completely randomly.

Pair Corralation between Polygon and Aelf

Assuming the 90 days trading horizon Polygon is expected to generate 0.94 times more return on investment than Aelf. However, Polygon is 1.06 times less risky than Aelf. It trades about -0.04 of its potential returns per unit of risk. aelf is currently generating about -0.05 per unit of risk. If you would invest  43.00  in Polygon on November 19, 2024 and sell it today you would lose (11.00) from holding Polygon or give up 25.58% of portfolio value over 90 days.

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

Polygon  vs.  aelf

Polygon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polygon 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 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 Polygon 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 Polygon and Aelf

The main advantage of trading using opposite Polygon and Aelf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polygon 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 Polygon 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.