Correlation Between MEC and Litecoin

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

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

Diversification Opportunities for MEC and Litecoin

0.0

Correlation Coefficient

MEC  Litecoin

Pay attention - limited upside

The 3 months correlation between MEC and Litecoin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MEC and Litecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litecoin and MEC 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 MEC are associated (or correlated) with Litecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litecoin has no effect on the direction of MEC i.e., MEC and Litecoin go up and down completely randomly.

Pair Corralation between MEC and Litecoin

If you would invest (100.00) in MEC on December 30, 2024 and sell it today you would earn a total of  100.00  from holding MEC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

MEC  vs.  Litecoin

MEC

Risk-Adjusted Performance

Very Weak

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

Litecoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Litecoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Litecoin shareholders.

Pair Trading with MEC and Litecoin

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

The idea behind MEC and Litecoin 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.